VOXX International Corporation Reports its Fiscal 2024 Second Quarter Financial Results
- VOXX International expects year-over-year growth and profitability in the second half of fiscal year 2024
- Restructuring initiatives expected to generate higher gross margins in the second half
- Net sales decreased by 9.6% in Q2 2024 compared to Q2 2023
- Automotive Electronics segment net sales decreased by 4.8% in Q2 2024
- Consumer Electronics segment net sales decreased by 11.3% in Q2 2024
- Gross margin improved by 190 basis points in Q2 2024 compared to Q2 2023
- Operating expenses declined by 5.3% in Q2 2024 compared to Q2 2023
- Net loss increased in Q2 2024 compared to Q2 2023
Commenting on the Company's results and business outlook, Pat Lavelle, Chief Executive Officer stated, "We saw modest improvements in our business sequentially and expect to generate year-over-year growth and profitability in the second half of our Fiscal year. The extent of our growth will be very much dependent on the state of the car markets, especially now with the UAW strike, as well as consumer spending during the upcoming holiday selling season. To combat market softness, we took significant steps during the quarter to restructure our business and have reduced our operating expenses significantly. We expect restructuring and realignment initiatives to also generate higher gross margins in the second half, with more improvements planned as we move into next year. New products and programs across each of our business segments are driving our optimism, though we remain very conservative in our outlook given the state of the global economies."
Fiscal 2024 and Fiscal 2023 Second Quarter Comparisons
Net sales in the Fiscal 2024 second quarter ended August 31, 2023, were
- Automotive Electronics segment net sales in the Fiscal 2024 second quarter were
$35.4 million $37.2 million $1.8 million 4.8% . For the same comparable periods, OEM product sales were$16.3 million $15.2 million $19.2 million $22.0 million
- Consumer Electronics segment net sales in the Fiscal 2024 second quarter were
$78.0 million $88.0 million $10.0 million 11.3% . For the same comparable periods, Premium Audio product sales were$53.2 million $69.2 million $24.8 million $18.8 million
- Biometrics segment net sales in the Fiscal 2024 second quarter were
$0.2 million $0.3 million
The gross margin in the Fiscal 2024 second quarter was
- Automotive Electronics segment gross margin of
24.3% as compared to24.5% . The modest decline in gross margin was primarily related to lower sales of higher margin products and product mix, partially offset by the positive impact of transitioning certain manufacturing toMexico during the second half of Fiscal 2023. The Company is beginning to realize improve margins on the sale of these products as a result of the cost savings generated from the manufacturing transition.
- Consumer Electronics segment gross margin of
25.5% as compared to22.6% . The year-over-year improvement of 290 basis points was primarily driven by higher sales of new accessory products and improved pricing from vendors, as well as a more favorable product mix.
- Biometrics segment gross margin of
27.3% as compared to40.1% in the comparable year-ago period.
Total operating expenses in the Fiscal 2024 second quarter were
- Selling expenses of
$10.0 million $1.8 million 15.5% , driven by lower commissions, employee salaries, related benefits and payroll taxes, and advertising and website expenses, as well as due to Employee Retention Credits received during the quarter, which have offset the Company's payroll tax expenses. This was offset by an increase in advertising expenses related to the Company's new hearing aid products launched in Fiscal 2024.
- General and administrative expenses of
$17.3 million $1.6 million 8.5% primarily due to lower legal and professional fees and a decrease in depreciation and amortization expense. This was partially offset by a modest increase in travel expense.
- Engineering and technical support expenses of
$7.9 million $0.4 million 5.2% , primarily due to lower research and development expenses and cost cutting measures undertaken by the Company. - Restructuring expenses increased by
$1.8 million Mexico .
The Company reported an operating loss in the Fiscal 2024 second quarter of
Total other expense, net, in the Fiscal 2024 second quarter was
Net loss attributable to VOXX International Corporation in the Fiscal 2024 second quarter was
The Company reported an Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") loss in the Fiscal 2024 second quarter of
Fiscal 2024 and Fiscal 2023 Six-Month Comparisons
Net sales in the Fiscal 2024 six-month period ended August 31, 2023, were
- Automotive Electronics segment net sales in the Fiscal 2024 six-month period were
$73.8 million $76.8 million $3.0 million 3.9% . For the same comparable periods, OEM product sales were$36.5 million $32.0 million $37.3 million $44.8 million
- Consumer Electronics segment net sales in the Fiscal 2024 six-month period were
$151.4 million $177.0 million $25.6 million 14.5% . For the same comparable periods, Premium Audio product sales were$100.8 million $139.1 million $50.6 million $37.8 million
- Biometrics segment net sales in the Fiscal 2024 six-month period were
$0.3 million $0.4 million
The gross margin in the Fiscal 2024 six-month period was
- Automotive Electronics segment gross margin of
22.6% as compared to23.3% . The 70 basis point decline in gross margin was primarily related to product mix and lower margins in the security and rear-seat entertainment categories, partially offset by the positive impact from transitioning certain manufacturing toMexico .
- Consumer Electronics segment gross margin of
25.5% as compared to25.0% . The year-over-year improvement of 50 basis points was primarily driven by higher sales of new accessory products, particularly the Company's new balcony solar power products and higher sales of wireless speakers. While sales of Premium Audio products declined, the Company did benefit from improved pricing from vendors, a more favorable product mix and fewer close-out promotions compared to the prior year.
- Biometrics segment gross margin of
34.0% as compared to36.3% in the comparable year-ago period.
Total operating expenses in the Fiscal 2024 six-month period were
- Selling expenses of
$21.2 million $3.0 million 12.3% , driven by lower commissions, employee salaries and related benefits and payroll taxes associated, as well as due to Employee Retention Credits which have offset payroll tax expenses. There were other declines in selling expenses related to ongoing cost saving measures.
- General and administrative expenses of
$36.7 million $1.3 million 3.4% primarily due to lower legal and professional fees, decrease in depreciation and amortization expense, and due to lower licensing expense, among other factors, partially offset by an increase in travel expense.
- Engineering and technical support expenses of
$16.2 million $0.5 million 2.9% , primarily due to lower research and development expenses and ongoing cost cutting measures.
- Acquisition costs of
$0.1 million - Restructuring expenses of
$2.1 million $1.8 million Mexico .
The Company reported an operating loss in the Fiscal 2024 six-month period of
Total other expense, net, in the Fiscal 2024 six-month period was
Net loss attributable to VOXX International Corporation in the Fiscal 2024 six-month period was
The Company reported an EBITDA loss in the Fiscal 2024 six-month period of
Balance Sheet Update
As of August 31, 2023, the Company had cash and cash equivalents of
Gentex Strategic Investment
On October 5, 2023, Avalon Park International LLC and Avalon Park Group Holding AG, as Sellers, and Gentex Corporation, as the Purchaser, entered into a Stock Purchase Agreement whereby Mr. Beat Kahli has agreed to sell
As noted in its Form 4 filing with the Securities and Exchange Commission on August 21, 2023, Gentex Corporation previously owned 173,808 shares of VOXX International's Class A Common Stock. With this most recent transaction and the one planned for January 2024, Gentex will own approximately
Conference Call Information
The Company will be hosting its conference call and webcast on Wednesday, October 11, 2023 at 10:00 a.m. ET.
- To attend the webcast: https://edge.media-server.com/mmc/p/f9dj99wo
- To access by phone: https://register.vevent.com/register/BI400776cdea464c6683bf085681b78fa3
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 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, gains on the sale of certain assets, foreign currency (gains) losses, restructuring expenses, acquisition costs, certain non-routine legal 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 press release 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 "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 2023, and other filings made by the Company from time to time with the SEC, as such descriptions may be updated or amended in any future reports we file with the SEC. The factors described in such SEC filings include, without limitation: impacts related to the COVID-19 pandemic, global supply shortages and logistics costs and delays; global economic trends; cybersecurity risks; risks that may result from changes in the Company's business operations; operational execution by our businesses; changes in law, regulation or policy that may affect our businesses; our ability to increase margins through implementation of operational improvements, restructuring and other cost reduction methods; 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 War in the Ukraine and any worsening of the global business and economic environment as a result.
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) | ||||||||
August 31, | February 28, | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,934 | $ | 6,134 | ||||
Accounts receivable, net of allowances of | 62,184 | 82,753 | ||||||
Inventory | 174,195 | 175,129 | ||||||
Receivables from vendors | 338 | 112 | ||||||
Due from GalvanEyes LLC | 2,500 | — | ||||||
Prepaid expenses and other current assets | 19,816 | 19,817 | ||||||
Income tax receivable | 1,079 | 1,076 | ||||||
Total current assets | 266,046 | 285,021 | ||||||
Investment securities | 934 | 1,053 | ||||||
Equity investment | 21,663 | 22,018 | ||||||
Property, plant and equipment, net | 45,931 | 47,044 | ||||||
Operating lease, right of use assets | 3,397 | 3,632 | ||||||
Goodwill | 64,297 | 65,308 | ||||||
Intangible assets, net | 86,473 | 90,437 | ||||||
Deferred income tax assets | 1,209 | 1,218 | ||||||
Other assets | 3,067 | 3,720 | ||||||
Total assets | $ | 493,017 | $ | 519,451 | ||||
Liabilities, Redeemable Equity, Redeemable Non-Controlling Interest, and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 36,786 | $ | 35,099 | ||||
Accrued expenses and other current liabilities | 40,036 | 41,856 | ||||||
Income taxes payable | 1,593 | 2,276 | ||||||
Accrued sales incentives | 18,598 | 21,778 | ||||||
Contingent consideration, current | 4,500 | 4,500 | ||||||
Final arbitration award payable | 45,987 | 43,388 | ||||||
Contract liabilities, current | 3,520 | 3,990 | ||||||
Current portion of long-term debt | 500 | 500 | ||||||
Total current liabilities | 151,520 | 153,387 | ||||||
Long-term debt, net of debt issuance costs | 41,213 | 37,513 | ||||||
Finance lease liabilities, less current portion | 366 | 63 | ||||||
Operating lease liabilities, less current portion | 2,390 | 2,509 | ||||||
Deferred compensation | 934 | 1,053 | ||||||
Deferred income tax liabilities | 4,599 | 4,855 | ||||||
Other tax liabilities | 875 | 966 | ||||||
Prepaid ownership interest in EyeLock LLC due to GalvanEyes LLC | 9,817 | 7,317 | ||||||
Other long-term liabilities | 2,146 | 2,947 | ||||||
Total liabilities | 213,860 | 210,610 | ||||||
Commitments and contingencies (Note 23) | ||||||||
Redeemable equity (Note 8) | 4,064 | 4,018 | ||||||
Redeemable non-controlling interest (Note 2) | (2,093) | 232 | ||||||
Stockholders' equity: | ||||||||
Preferred stock: | ||||||||
No shares issued or outstanding (Note 19) | — | — | ||||||
Common stock: | ||||||||
Class A, | 246 | 246 | ||||||
Class B Convertible, | 22 | 22 | ||||||
Paid-in capital | 297,043 | 296,577 | ||||||
Retained earnings | 77,320 | 97,997 | ||||||
Accumulated other comprehensive loss | (17,654) | (18,680) | ||||||
Less: Treasury stock, at cost, 4,009,575 and 3,370,657 shares of Class A Common Stock at August 31, | (37,257) | (30,285) | ||||||
Less: Redeemable equity | (4,064) | (4,018) | ||||||
Total VOXX International Corporation stockholders' equity | 315,656 | 341,859 | ||||||
Non-controlling interest | (38,470) | (37,268) | ||||||
Total stockholders' equity | 277,186 | 304,591 | ||||||
Total liabilities, redeemable equity, redeemable non-controlling interest, and stockholders' equity | $ | 493,017 | $ | 519,451 | ||||
VOXX International Corporation and Subsidiaries | ||||||||||||||||
Unaudited Consolidated Statements of Operations and Comprehensive Loss | ||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net sales | $ | 113,642 | $ | 125,705 | $ | 225,568 | $ | 254,437 | ||||||||
Cost of sales | 85,017 | 96,448 | 169,363 | 191,941 | ||||||||||||
Gross profit | 28,625 | 29,257 | 56,205 | 62,496 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling | 10,021 | 11,865 | 21,187 | 24,150 | ||||||||||||
General and administrative | 17,250 | 18,853 | 36,677 | 37,983 | ||||||||||||
Engineering and technical support | 7,857 | 8,284 | 16,194 | 16,673 | ||||||||||||
Acquisition costs | — | — | — | 136 | ||||||||||||
Restructuring expenses | 2,008 | 229 | 2,067 | 229 | ||||||||||||
Total operating expenses | 37,136 | 39,231 | 76,125 | 79,171 | ||||||||||||
Operating loss | (8,511) | (9,974) | (19,920) | (16,675) | ||||||||||||
Other (expense) income: | ||||||||||||||||
Interest and bank charges | (1,573) | (911) | (3,119) | (1,641) | ||||||||||||
Equity in income of equity investee | 1,241 | 1,763 | 2,857 | 3,351 | ||||||||||||
Final arbitration award | (1,612) | (986) | (2,598) | (1,972) | ||||||||||||
Other, net | (952) | (1,519) | (1,653) | (3,629) | ||||||||||||
Total other expense, net | (2,896) | (1,653) | (4,513) | (3,891) | ||||||||||||
Loss before income taxes | (11,407) | (11,627) | (24,433) | (20,566) | ||||||||||||
Income tax expense (benefit) | 1,170 | (708) | (151) | (1,800) | ||||||||||||
Net loss | (12,577) | (10,919) | (24,282) | (18,766) | ||||||||||||
Less: net loss attributable to non-controlling interest | (1,513) | (703) | (2,480) | (2,023) | ||||||||||||
Net loss attributable to VOXX International | $ | (11,064) | $ | (10,216) | $ | (21,802) | $ | (16,743) | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustments | 821 | (2,128) | 1,059 | (3,622) | ||||||||||||
Derivatives designated for hedging | 33 | 99 | (27) | 186 | ||||||||||||
Pension plan adjustments | (5) | 40 | (6) | 72 | ||||||||||||
Other comprehensive income (loss), net of tax | 849 | (1,989) | 1,026 | (3,364) | ||||||||||||
Comprehensive loss attributable to VOXX International | $ | (10,215) | $ | (12,205) | $ | (20,776) | $ | (20,107) | ||||||||
Loss per share - basic: Attributable to VOXX International | $ | (0.47) | $ | (0.42) | $ | (0.92) | $ | (0.69) | ||||||||
Loss per share - diluted: Attributable to VOXX | $ | (0.47) | $ | (0.42) | $ | (0.92) | $ | (0.69) | ||||||||
Weighted-average common shares outstanding (basic) | 23,462,575 | 24,423,577 | 23,629,147 | 24,418,020 | ||||||||||||
Weighted-average common shares outstanding (diluted) | 23,462,575 | 24,423,577 | 23,629,147 | 24,418,020 | ||||||||||||
Reconciliation of GAAP Net Loss Attributable to VOXX International Corporation | ||||||||||||||||
to EBITDA and Adjusted EBITDA | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net loss attributable to VOXX International Corporation | $ | (11,064) | $ | (10,216) | $ | (21,802) | $ | (16,743) | ||||||||
Adjustments: | ||||||||||||||||
Interest expense and bank charges (1) | 1,371 | 710 | 2,717 | 1,237 | ||||||||||||
Depreciation and amortization (1) | 3,094 | 3,449 | 6,195 | 6,353 | ||||||||||||
Income tax expense (benefit) | 1,170 | (708) | (151) | (1,800) | ||||||||||||
EBITDA | (5,429) | (6,765) | (13,041) | (10,953) | ||||||||||||
Stock-based compensation | 208 | 136 | 466 | 262 | ||||||||||||
Gain on sale of tradename | — | — | (450) | — | ||||||||||||
Foreign currency (gains) losses (1) | 1,214 | 1,728 | 2,176 | 4,090 | ||||||||||||
Restructuring expenses | 2,008 | 229 | 2,067 | 229 | ||||||||||||
Acquisition costs | — | — | — | 136 | ||||||||||||
Non-routine legal fees | 378 | 350 | 1,231 | 858 | ||||||||||||
Final arbitration award | 1,612 | 986 | 2,598 | 1,972 | ||||||||||||
Adjusted EBITDA | $ | (9) | $ | (3,336) | $ | (4,953) | $ | (3,406) | ||||||||
(1) | For purposes of calculating Adjusted EBITDA for the Company, interest expense and bank charges, depreciation and amortization, as well as foreign currency losses and (gains) have been adjusted in order to exclude the non-controlling interest portion of these expenses attributable to EyeLock LLC and Onkyo Technology KK. |
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SOURCE VOXX International Corporation
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