VOXX International Corporation Reports its Fiscal 2025 First Quarter Financial Results
VOXX International (NASDAQ: VOXX) announced its fiscal 2025 first-quarter financial results, highlighting a net sales decline of 18.1% to $91.7 million compared to the previous year.
Despite the sales drop, gross margins improved by 310 basis points to 27.7%. Operating expenses were reduced by 16.6% to $32.5 million, contributing to an adjusted EBITDA loss improvement to $2.9 million, a $2.1 million improvement from the previous year.
The net loss attributable to VOXX was $9.3 million, down from $10.7 million the previous year. The company highlighted aggressive cost-cutting measures and restructuring programs as steps to return to profitability, expecting these changes to positively impact the fiscal year.
The Automotive Electronics segment saw a sales decline of 27.9% while the Consumer Electronics segment decreased by 12.8%. However, gross margins for both segments improved. VOXX ended the quarter with $4.2 million in cash and reduced its total debt to $68.6 million.
- Gross margins improved by 310 basis points to 27.7%.
- Operating expenses declined by 16.6%, saving $6.5 million.
- Adjusted EBITDA loss improved by $2.1 million year-over-year.
- Expectations to return to profitability within the fiscal year.
- Reduced total debt from $73.3 million to $68.6 million.
- Net sales declined by 18.1% year-over-year to $91.7 million.
- Automotive Electronics segment sales fell by 27.9%.
- Consumer Electronics segment sales decreased by 12.8%.
- Net loss of $9.3 million, though reduced from the prior year.
Insights
VOXX International Corporation's fiscal 2025 first-quarter financial results tell a story of both struggle and strategic pivoting. The most pronounced data point is the 18.1% decline in net sales, dropping to
Interestingly, despite the sales decline, operating expenses decreased by 16.6%, signaling strong cost-control measures. The adjusted EBITDA loss stands at
It is also notable that automotive segment sales dropped by
Long-term debt improved by
For retail investors, this mixed result provides a cautious yet optimistic outlook. While sales have shrunk, the cost efficiency and margin improvement are promising signs of potential recovery. However, the downturn in specific product lines suggests that revenue generation remains a critical challenge. This detailed picture is essential for investors to evaluate VOXX's strategic positioning and future profitability potential.
The recent financial results of VOXX International Corporation illustrate a company in transition. While the net sales reduction of
The automotive electronics segment has faced significant hurdles, particularly with the decline in OEM rear seat entertainment (RSE) products. The temporary halts and volume reductions in customer programs, alongside the termination of a key customer program, suggest market-specific challenges that need to be addressed to revive this segment.
Conversely, the consumer electronics segment appears to be on a more stable path, with premium audio product sales experiencing a slight increase domestically. This growth, driven by the successful launch of new products, showcases VOXX's capability to innovate and adapt to consumer demands. However, the decline in wireless accessory speakers sales and balcony solar power products highlights a potential over-reliance on specific product lines, which may require strategic diversification.
The holistic restructuring efforts, including the transition of OEM production to Mexico and the formation of the BioCenturion LLC joint venture, are noteworthy. These moves indicate VOXX's intent to streamline operations and leverage partnerships to strengthen its market position.
For retail investors, understanding these dynamics helps in assessing the company's adaptability and commitment to long-term growth amidst market pressures and economic uncertainties. Observing how VOXX navigates these challenges will be key to evaluating its future performance.
VOXX International’s latest financial results provide an insightful look into the technological shifts within its portfolio. The reported 27.9% decline in automotive electronics sales points to a significant impact from customer program changes and reduced demand for rear seat entertainment systems. This suggests a possible market trend where consumers and manufacturers may be shifting focus towards other forms of in-car entertainment or technology advancements.
Moreover, the increase in gross margins by 310 basis points reflects effective cost-management strategies, such as the relocation of OEM manufacturing to Mexico. This move likely resulted in lower production costs, enabling the company to improve profitability despite lower sales volumes.
In the consumer electronics segment, the reported growth in premium audio product sales domestically stands out. VOXX’s ability to launch new products successfully demonstrates the company's strong R&D capabilities and market responsiveness. However, the decline in wireless accessory speakers sales due to the non-repetition of a large customer program indicates potential volatility in this sub-segment.
For investors, these technological shifts and product performance insights underline the importance of monitoring VOXX’s innovation trajectory and market adaptation. The company’s focus on restructuring and operational efficiency will be critical in weathering market challenges and capitalizing on technological advancements in their industry.
Net sales declined by
Commenting on the Company's first quarter results, Pat Lavelle, Chief Executive Officer stated, "During the first quarter, we took aggressive steps to improve gross margins and lower both our operating expenses and working capital needs. While our sales were down for the comparable periods, gross margins improved in our Automotive and Consumer segments, and we reduced year-over-year expenses by over
Fiscal 2025 and Fiscal 2024 First Quarter Comparisons
On March 1, 2024, the Company's majority owned subsidiary, EyeLock LLC, contributed assets, including inventory and intangible assets, to a newly formed joint venture, BioCenturion LLC, that will operate the Biometrics business moving forward. For the three months ended May 31, 2024, the Company accounted for its investment in BioCenturion as an equity method investment within our Biometrics segment (see Note 12 in the Company's Form 10-Q filed with the Securities and Exchange Commission).
Net sales in the Fiscal 2025 first quarter ended May 31, 2024, were
- Automotive Electronics segment net sales in the Fiscal 2025 first quarter were
$27.7 million $38.4 million $10.7 million 27.9% . For the same comparable periods, OEM product sales were$12.8 million $20.3 million $14.8 million $18.1 million
- Consumer Electronics segment net sales in the Fiscal 2025 first quarter were
$63.9 million $73.3 million $9.4 million 12.8% . For the same comparable periods, premium audio product sales were$48.4 million $47.6 million Europe andAsia . Other consumer electronics ("CE") product sales were$15.5 million $25.7 million
The gross margin in the Fiscal 2025 first quarter was
- Automotive Electronics segment gross margin of
23.2% as compared to21.0% , an increase of 220 basis points with the year-over-year improvement primarily driven by the Company's OEM manufacturing transition fromFlorida toMexico , as well as improvements related to product mix.
- Consumer Electronics segment gross margin of
29.6% as compared to25.5% , an increase of 410 basis points. The year-over-year improvement was primarily driven by the launch of new products both domestically and internationally and fewer close-out promotion sales, with other offsetting factors.
Total operating expenses in the Fiscal 2025 first quarter were
- Selling expenses of
$9.6 million $11.2 million $1.6 million 14.1% was primarily driven by lower website and trade show expenses, as well as lower headcount related expenses.
- General and administrative ("G&A") expenses of
$16.5 million $19.4 million $3.0 million 15.3% was primarily driven by lower headcount related expenses, and a decline in legal, professional and third-party service fees, among other factors.
- Engineering and technical support expenses of
$6.2 million $8.3 million $2.1 million 25.1% was primarily due to a decline in labor expense due to lower headcount, as well as lower research and development expenses.
- The Company incurred approximately
$0.2 million $0.1 million Mexico .
The Company reported an operating loss of
Total other expense, net, in the Fiscal 2025 first quarter increased by
Net loss attributable to VOXX International Corporation in the Fiscal 2025 first quarter was
The Company reported an Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") loss in the Fiscal 2025 first quarter of
Balance Sheet Update
As of May 31, 2024, the Company had cash and cash equivalents of
Conference Call Information
The Company will be hosting its conference call and webcast on Thursday, July 11, 2024 at 10:00 a.m. ET.
- To attend the webcast: https://edge.media-server.com/mmc/p/kzsk98zv
- To access by phone: https://register.vevent.com/register/BI7eae05a5e3b74b5b8b78a3235500c167
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, loss on contribution of assets to a joint venture, foreign currency losses, restructuring expenses, certain non-routine legal fees, and awards. Depreciation, amortization, stock-based compensation, loss on contribution of assets to a joint venture, and foreign currency losses are non-cash items.
We present EBITDA and Adjusted EBITDA in this 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 worldwide leader in the Automotive Electronics and Consumer Electronics industries. 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 29, 2024, 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
VOXX International Corporation and Subsidiaries Consolidated Balance Sheets (In thousands, except share and per share data) | ||||||||
May 31, | February 29, | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,160 | $ | 10,986 | ||||
Accounts receivable, net of allowances of | 64,787 | 71,066 | ||||||
Inventory | 116,230 | 128,471 | ||||||
Receivables from vendors | 1,190 | 1,192 | ||||||
Due from GalvanEyes LLC, current | - | 1,238 | ||||||
Prepaid expenses and other current assets | 16,759 | 20,820 | ||||||
Income tax receivable | 4,273 | 2,095 | ||||||
Total current assets | 207,399 | 235,868 | ||||||
Investment securities | 761 | 828 | ||||||
Equity investments | 23,762 | 21,380 | ||||||
Property, plant and equipment, net | 44,420 | 45,070 | ||||||
Operating lease, right of use assets | 3,053 | 2,577 | ||||||
Goodwill | 63,283 | 63,931 | ||||||
Intangible assets, net | 65,265 | 68,766 | ||||||
Due from GalvanEyes LLC, less current portion | - | 1,340 | ||||||
Deferred income tax assets | 1,461 | 1,452 | ||||||
Other assets | 2,798 | 2,794 | ||||||
Total assets | $ | 412,202 | $ | 444,006 | ||||
Liabilities, Redeemable Equity, Redeemable Non-Controlling Interest, and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 25,895 | $ | 35,076 | ||||
Accrued expenses and other current liabilities | 36,601 | 38,238 | ||||||
Income taxes payable | 834 | 1,123 | ||||||
Accrued sales incentives | 15,160 | 18,236 | ||||||
Contract liabilities, current | 3,574 | 3,810 | ||||||
Current portion of long-term debt | 4,162 | 500 | ||||||
Total current liabilities | 86,226 | 96,983 | ||||||
Long-term debt, net of debt issuance costs | 63,684 | 71,881 | ||||||
Finance lease liabilities, less current portion | 559 | 644 | ||||||
Operating lease liabilities, less current portion | 2,127 | 1,884 | ||||||
Deferred compensation | 761 | 828 | ||||||
Deferred income tax liabilities | 2,604 | 2,690 | ||||||
Other tax liabilities | 706 | 809 | ||||||
Prepaid ownership interest in EyeLock LLC due to GalvanEyes LLC | - | 9,817 | ||||||
Other long-term liabilities | 2,147 | 2,170 | ||||||
Total liabilities | 158,814 | 187,706 | ||||||
Commitments and contingencies | ||||||||
Redeemable equity: Class A, | 4,110 | 4,110 | ||||||
Redeemable non-controlling interest | (3,158) | (3,203) | ||||||
Stockholders' equity: | ||||||||
Preferred stock: | ||||||||
No shares issued or outstanding | - | - | ||||||
Common stock: | ||||||||
Class A, | 240 | 240 | ||||||
Class B Convertible, | 22 | 22 | ||||||
Paid-in capital | 296,044 | 293,272 | ||||||
Retained earnings | 49,003 | 58,272 | ||||||
Accumulated other comprehensive loss | (16,784) | (17,366) | ||||||
Less: Treasury stock, at cost, 4,351,183 and 4,287,041 shares of Class A Common Stock at May 31, 2024 and February 29, 2024, respectively | (39,821) | (39,573) | ||||||
Total VOXX International Corporation stockholders' equity | 288,704 | 294,867 | ||||||
Non-controlling interest | (36,268) | (39,474) | ||||||
Total stockholders' equity | 252,436 | 255,393 | ||||||
Total liabilities, redeemable equity, redeemable non-controlling interest, and stockholders' equity | $ | 412,202 | $ | 444,006 | ||||
VOXX International Corporation and Subsidiaries Unaudited Consolidated Statements of Operations and Comprehensive Loss (In thousands, except share and per share data) | ||||||||
Three months ended | ||||||||
2024 | 2023 | |||||||
Net sales | $ | 91,661 | $ | 111,926 | ||||
Cost of sales | 66,252 | 84,346 | ||||||
Gross profit | 25,409 | 27,580 | ||||||
Operating expenses: | ||||||||
Selling | 9,590 | 11,166 | ||||||
General and administrative | 16,457 | 19,427 | ||||||
Engineering and technical support | 6,244 | 8,337 | ||||||
Restructuring expenses | 231 | 59 | ||||||
Total operating expenses | 32,522 | 38,989 | ||||||
Operating loss | (7,113) | (11,409) | ||||||
Other (expense) income: | ||||||||
Interest and bank charges | (2,138) | (1,546) | ||||||
Equity in income of equity investees | 351 | 1,616 | ||||||
Final arbitration award | - | (986) | ||||||
Other, net | (1,871) | (701) | ||||||
Total other expense, net | (3,658) | (1,617) | ||||||
Loss before income taxes | (10,771) | (13,026) | ||||||
Income tax benefit | (594) | (1,321) | ||||||
Net loss | (10,177) | (11,705) | ||||||
Less: net loss attributable to non-controlling interest | (908) | (967) | ||||||
Net loss attributable to VOXX International Corporation and Subsidiaries | $ | (9,269) | $ | (10,738) | ||||
Other comprehensive income (loss): | ||||||||
Foreign currency translation adjustments | 595 | 238 | ||||||
Derivatives designated for hedging | (13) | (60) | ||||||
Pension plan adjustments | - | (1) | ||||||
Other comprehensive income, net of tax | 582 | 177 | ||||||
Comprehensive loss attributable to VOXX International Corporation and Subsidiaries | $ | (8,687) | $ | (10,561) | ||||
Loss per share - basic: Attributable to VOXX International Corporation and Subsidiaries | $ | (0.40) | $ | (0.45) | ||||
Loss per share - diluted: Attributable to VOXX International Corporation and Subsidiaries | $ | (0.40) | $ | (0.45) | ||||
Weighted-average common shares outstanding (basic) | 23,139,876 | 23,795,718 | ||||||
Weighted-average common shares outstanding (diluted) | 23,139,876 | 23,795,718 | ||||||
Reconciliation of GAAP Net Loss Attributable to VOXX International Corporation to EBITDA and Adjusted EBITDA | ||||||||
Three months ended | ||||||||
2024 | 2023 | |||||||
Net loss attributable to VOXX International Corporation and Subsidiaries | $ | (9,269) | $ | (10,738) | ||||
Adjustments: | ||||||||
Interest expense and bank charges (1) | 1,923 | 1,346 | ||||||
Depreciation and amortization (1) | 2,728 | 3,101 | ||||||
Income tax benefit | (594) | (1,321) | ||||||
EBITDA | (5,212) | (7,612) | ||||||
Stock-based compensation | 146 | 258 | ||||||
Gain on sale of tradename | - | (450) | ||||||
Loss on contribution of assets to joint venture (1) | 252 | - | ||||||
Foreign currency losses (1) | 1,849 | 962 | ||||||
Restructuring expenses | 231 | 59 | ||||||
Non-routine legal fees | (123) | 853 | ||||||
Final arbitration award | - | 986 | ||||||
Adjusted EBITDA | $ | (2,857) | $ | (4,944) | ||||
(1) | For purposes of calculating Adjusted EBITDA for the Company, interest expense and bank charges, depreciation and amortization, losses on the contribution of assets to a joint venture, as well as foreign currency losses have been adjusted in order to exclude the non-controlling interest portion of these expenses attributable to EyeLock LLC and Onkyo Technology KK, as appropriate. |
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SOURCE VOXX International Corporation (NASDAQ:VOXX)
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