NASDAQ:VOXX VOXX International Q2 2024 Earnings Report $7.50 0.00 (0.00%) As of 04/1/2025 Earnings History VOXX International EPS ResultsActual EPS-$0.38Consensus EPS -$0.37Beat/MissMissed by -$0.01One Year Ago EPSN/AVOXX International Revenue ResultsActual Revenue$113.64 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AVOXX International Announcement DetailsQuarterQ2 2024Date10/11/2023TimeAfter Market ClosesConference Call DateWednesday, October 11, 2023Conference Call Time10:00AM ETUpcoming EarningsVOXX International's Q4 2025 earnings is scheduled for Monday, May 12, 2025, with a conference call scheduled on Wednesday, May 14, 2025 at 4:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by VOXX International Q2 2024 Earnings Call TranscriptProvided by QuartrOctober 11, 2023 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to VOXX Fiscal 20 24 Second Quarter Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. You will then hear an automated message advising your hand is raised. Operator00:00:24Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Glenn Weiner, President and Chief Executive Officer. Please go ahead, sir. Speaker 100:00:34Thank you, Norm. I appreciate it. Good morning, and welcome to VOXX International's fiscal 2024 Second Quarter Conference Call. My name is Glenn Wiener, President CEO of GW Communications, Investor Relations firm for Vox. Yesterday, we filed our Form 10 Q and issued our press release, both documents of which can be found in the Investor Relations section our website at www.voxxintl.com. Speaker 100:00:59Speaking from management Will be Pat Lavelle, Chief Executive Officer and Michael Storrs, Senior Vice President and Chief Financial Officer. Their remarks will be followed by questions and answers. As for today, I'd like to remind everyone that except for historical information contained herein, statements made on today's call and webcast that constitute forward looking statements are based on currently available information. The company assumes no responsibility to update any such forward looking statements, and I would like to point you The risk factors associated with our business, which are detailed in our Form 10 ks for the period ended February 28, 2023. Thank you for your continued support, and it's my pleasure to now turn the call over to Pat. Speaker 200:01:38Thanks, Glenn, and good morning, everyone. Not much has changed since our Q1 remarks in July. As the Global markets remain challenging. Consumer spending is down and the automakers are still having production issues. With that said, we saw some modest improvements in our business this quarter, which helped combat the overall softness in the economy. Speaker 200:02:04As we look out into the second half of the year, we expect to see top line growth compared to fiscal 2023 and to be profitable. The extent of our growth and profits, however, will be very much dependent on the state of the car markets, especially now with the UAW strike and, of course, The consumer, we're doing what we can to combat anything that comes our way and in 2Q, we took significant actions to do just that. We initiated a significant restructuring program, removing headcount and lowering our non essential spend across the company. We exited several third party agreements and restructured contracts to lower fees. We completed our OEM transition to Mexico for most of our OEM product lines, which will reduce costs and help improve margins. Speaker 200:02:56And we continue to work with our supply chain to redo pricing with more favorable terms, while moving out of our inventory positions to protect our balance sheet. We're essentially taking out everything we can based on lower sales volumes without impacting our ability to serve our customer and innovate. As for the 2Q quarter results, sales were down Approximately 10% year over year and up 1.5% sequentially. Gross profit improved by 190 basis Points driven by gains in our consumer segment. Operating expenses improved by over 5% and roughly 10% when you take out restructuring expenses. Speaker 200:03:39While we lost money in the quarter, our operating loss improved by $1,500,000 and we reported flat adjusted EBITDA, which was $3,300,000 better than 2Q of last year. Within our consumer segment, Consumer sales were down $10,000,000 year over year with Premium Audio down roughly $16,000,000 and other CE product sales up 6,000,000 Our Premium Audio business has been hit hard over the past 18 months after a great run during the early stages of the pandemic and the year that followed. Over the past few years, however, we faced global supply chain issues, a deteriorating global economy A very challenging retail environment with high inventory positions and rising interest rates, changing the way retailers operate. I'm not saying that we're out of the woods yet, but we are now we expect the trend to reverse I suppose growth again as we've retooled some of our products and have several new launches in the second half of the year with customer programs to support them. Premium Audio sales were up $5,600,000 sequentially And we're expecting to see continued sequential growth in the Q3 as it's the beginning of the holiday season and for our Q3 to come in higher than last year. Speaker 200:05:03The speaker category overall is down and many of our competitors are in the same position. In the most recent NPD report, the speaker market is down roughly 16% year to date and Klipsch Continues to maintain its number one market share. Further, some of our business was down compared to the same quarter last year Due to heavy promotions last year and a big program at Costco that launched in 2Q of last year. Now that's the past and what's driving our optimism for growth over the next few quarters are our new products. We have retooled our soundbar offering and have a slate of new soundbars coming to market during the second half of the year. Speaker 200:05:48The Klipsch Flexus will be launching before the year is out and it's the first ever product developed in tandem by Klipsch and Onkyo. Our new party speakers are doing very well and new launches are planned in the second half of the year. This is the hottest category in CE as I mentioned on our last call. We will soon be launching our new Klipsch Music City portable Bluetooth speakers that can broadcast to other Bluetooth speakers in stereo and other speakers around the house or outdoors. Hookup is very simple As you simply stream content through your devices. Speaker 200:06:29Our new subwoofers recently introduced this year are doing very well and have received excellent reviews, which should help continue to drive growth in this category. And as we announced previously, the Klipsch Reference Premier speakers will be on the Dodge Ram EV Trucks with an impressive 26 speaker sound system. This is the first entrance of the Klipsch brand into automotive, and we believe this is a new area of growth as other automotive manufacturers Recognize the value of the Klipsch brand. Other CE product sales, as I mentioned, were up $6,000,000 and the growth was driven By our new solar balcony power product launched by Schweiger in Germany and to a lesser extent our new RCA hearing aids, which We introduced this past May. Our accessory business overall continues to be especially our core products continue to be impacted By the economy, but more so by consumer spending. Speaker 200:07:30For example, TV sales are in a slump. And now what we don't sell TVs, but we do sell a lot of products that are attachment sales such as remotes, antennas, Virtually all of these categories are down, but during the Q2, we saw As for our Automotive segment, Automotive segment sales were down $1,800,000 or a little less than 5%. Our OEM business grew by $1,000,000 as some of the material shortages began to loosen and we fulfilled several back orders, particularly at code for remote start and security applications. VSM sales were up close to 5% and our rear seat entertainment programs were down for the quarter. OEM was up, but the obstacles we and the industry face continued to hinder our growth. Speaker 200:08:34Our aftermarket business was down for the quarter by $2,800,000 and we expected declines given the high inventory positions our customers have carried and the overall retail environment, but the good news is that the inventory bottleneck is beginning to loosen. The automotive aftermarket, overall continues to be challenged with some puts and takes. On one hand, we see an increase in car sales. However, the largest part of the increase is at fleets instead of retail car sales. And additionally, where car dealers would normally offer Aftermarket products to increase profitability, the tightness in inventory and strong demand has allowed them to just add Market adjustment increases to the stick at price. Speaker 200:09:21We now expect with the potential of an extended UAW strike that inventory tightness We'll continue. But with that said, the other OEM contracts that are in place, even at lower than projected volumes, Should help drive top line. However, it's the bottom line that we're focused on most. We instituted price increases, reworked our supply chain network, developed new technologies using different chips given availability and transition most of our production lines from Florida to Mexico. We're beginning to see the positive impact of all these moves And looking ahead, we have new programs with Ford for the Lincoln Navigator and Ford Expedition. Speaker 200:10:11Our new lighting program with Nissan starts next year And our program to support the new postal trucks also starts next year. As for our biometrics segment, sales came in Approximately 200,000 lower than the prior year and our budget. This was primarily due to lower licenses and again to some projects being pushed out. Everything that we have talked about on prior calls remains in place. We're continuing to work with car dealers, infrastructures, governments, financial service companies and on healthcare programs. Speaker 200:10:46With respect to the latter, We recently submitted our final prototype to our partner, which is now in the final step of validation. Production should begin by the middle of next year, And we expect other opportunities to arise with this customer and others once it's in the field and we are focused on growing our embedded solution portfolio. To sum it up, the Q2 was expected and we're not pleased with our results for the first half of the year. We've taken more aggressive actions to combat the economy and other issues we're facing and the past actions coupled with the recent restructuring will help improve margins And lower our costs. We expect growth in the second half of the year based on the contracts we have, the new programs we've secured And both the new products we've launched and will be launching. Speaker 200:11:38Of course, we're mindful of any further deterioration in the economy And we expect markets to remain hard pressed for the next year or so. If things worsen, we'll take more Action, but we believe we have made the necessary adjustments in our business to drive profitability in the second half and to start fiscal 2025 In a more competitive position. One last item to discuss before I turn the call over to Mike. As you may have seen in our earnings release and the Form 4 that was filed yesterday, we have a new strategic investor in VOXX, Gentex Corporation, A company that we currently do business with entered into a stock purchase agreement with Avalon Park LLC and Avalon Park Group Holding AG, both of which are controlled by Biya Tali, our President and one of VOXX's largest shareholders. Collectively, Avalon has agreed to sell 50 percent of its holdings to Gentex or approximately 3,100,000 shares in 2 separate transactions. Speaker 200:12:42The first transaction of 1,570,000 shares was completed on Friday at $10 per share, representing a 32.5 percent premium to our stock price as of October 5, the day prior to the transaction. The second transaction of the same amount will be in January 24, and the stock price will be based on the formula as noted in our release. When complete, Gentex will own approximately 15.1 percent of our Class A common stock and will become one of our 3 largest shareholders. When Biatt came on as President, one of his primary focus areas was strategic partnerships. This was probably his number one priority as we were looking to align with industry leaders to help drive growth and value in our business. Speaker 200:13:34And with Gentex, we have found a great partner as we are collaborating with them in both our biometric and automotive segments on current projects, while concurrently looking to drive innovation in our offerings to grow our joint businesses and market share. Steve Downing, who serves as CEO and President of Gentex also sits on our Board and this alliance is one that we believe holds great promise for our company And with that, I'll now turn the call over to Mike to review financials and then we'll open it for questions. Michael? Speaker 300:14:10Thanks, Pat, and good morning, everyone. We reported total second quarter net sales of 113,600,000 A decline of approximately $12,100,000 Within this, Automotive segment sales were down $1,800,000 Consumer segment sales were down $10,000,000 and biometric segment sales declined by approximately 100,000. While sales were down year over year, they were up sequentially by $1,700,000 and we're expecting improvements in the second half of the year. Within automotive, OEM product sales increased by $1,000,000 and aftermarket product sales declined by $2,800,000 And within the consumer, Premium Audio product sales declined by $16,000,000 while other CE product sales increased by 6,000,000 We reported gross margins of 25.2 percent, an improvement of 190 basis points Compared to Q2 last year and an improvement of 60 basis points sequentially. Automotive margins were essentially flat An increase was driven by the improvement in our consumer segment, which we anticipate will continue. Speaker 300:15:22If automotive volumes materialize as our customers We should see improvements in our automotive segment as well as with the relocation of manufacturing to Mexico now complete And other changes we've made to our infrastructure and supply chain. Our operating expenses improved by $2,100,000 Year over year as we continue to lower our costs. Selling expenses declined by $1,800,000 or 15.5 percent. G and A expenses declined by $1,600,000 or 8.5 percent and engineering and technical support expenses declined by 400,000. As Pat noted, during the Q2, we initiated a large restructuring program to lower our costs further in light of the current environment And incurred restructuring expenses of $2,000,000 in fiscal 2024 Q2 compared to $200,000 in the comparable fiscal 20 23 period. Speaker 300:16:21Excluding restructuring expenses, total operating expenses for the comparable second quarter periods Declined by $3,900,000 or close to 10%. We reported an operating loss of $8,500,000 compared to $10,000,000 in Q2 of last year and a net loss attributable to Box of $11,100,000 compared to 10,900,000 EBITDA in the 2nd quarter was a loss of $5,400,000 and adjusted EBITDA was essentially flat. This compares to an EBITDA loss of $6,800,000 and adjusted EBITDA loss of $3,300,000 in the Q2 of fiscal 2023. I'll note, EBITDA and adjusted EBITDA improved on a sequential basis by $2,200,000 $4,900,000 respectively. Through the 1st 6 months of fiscal 2024 compared to fiscal 2023, net sales were down 11.3% With Automotive segment sales down 3.9% and Consumer segment sales down 14.5%. Speaker 300:17:24Again, as Pat noted, we anticipate year over year growth in the second half of the year. Gross margins of 24.9% improved by 30 basis And we expect further improvements in the second half of the year as well for the reasons Pat's covered. Operating expenses improved by 3.8% Or 6% when excluding restructuring expenses and acquisition costs. On an operating basis, we lost $19,900,000 Compared to a loss of $16,700,000 and net loss attributable to VOXX in fiscal 2024 6 month period was $21,800,000 as compared to a net loss of $16,700,000 Lastly, we reported an EBITDA loss of $13,000,000 And adjusted EBITDA loss of $5,000,000 Moving on to the balance sheet. As of August 31, We had cash and cash equivalents of $5,900,000 which compares to $5,200,000 as of May 31 And $6,100,000 as of our fiscal 2023 year end of February 28. Speaker 300:18:30Our accounts receivable declined by approximately $21,000,000 And our inventory position declined by approximately $1,000,000 compared to fiscal 2023 Q4. Our inventory position declined by approximately $10,000,000 sequentially and as we move through the inventory during the holiday season, We expect our inventory balances decline further. Our total debt stood at $42,800,000 as compared to $39,200,000 as of February 28. The increase in total debt was driven by a $4,100,000 increase in our borrowings associated with our domestic credit facility, Offset by a $250,000 decline in our Florida mortgage and a $200,000 decline in the amount owed on the shareholder loan payable to Sharp as part of our joint venture. Total long term debt, net of debt issuance cost was $41,200,000 as of August 31st as compared to $37,500,000 as of February 28. Speaker 300:19:43Excuse me, as I said, our operating expenses improved by $2,100,000 year over year. So listen, I'd like to finish my remarks. And operator, we're now ready to open the call for questions. Operator00:19:58Thank you. Please wait for your name to be announced. Please stand by while we compile the Q and A roster. One moment for our first question please. Our first question comes from the line of Tom Forte with D. Operator00:20:25A. Davidson, your line is now open. Speaker 400:20:28Great. Thanks. I had a couple of questions, but I go one at a time. So first, congrats on the Gentex investment. Pat, can you talk at a high level about your opportunity to monetize EyeLock on a near term and a longer term basis? Speaker 200:20:43Well, when we look at EyeLock, as I said, the final prototype went over to our customer. We expect that everything will go well with that prototype and production for their Particular machine is scheduled for the middle of next year, which we believe we will be on it. It is a long term program. I can't get into much detail on it at this point, but it is a long term program, which will have material positive impact On EyeLock. Speaker 400:21:21And then second question, can we talk about sell in and sell through? So are you seeing any change in behavior for large consumer electronics retailers When we think about their willingness to add inventory and then on the sell through part, Do you think consumers are responding favorably to increased promotional activity within the consumer electronics category? Or do you feel like that's not very effective in today's current environment? Speaker 200:21:55Well, I think that when we look at Sell in, we look at the retailers being quite conservative with what they're taking in. We have not seen issues with their sell through. So they may they apparently are taking in the proper amount of product coming in. There will be promotions throughout the holiday season. It's generally our biggest quarter. Speaker 200:22:20But There is obviously, there's been a change in consumer behavior, with credit cards being at all time high, interest rates on credit And we know that we see shrinking savings accounts On consumers, so some of the pent up money that was sitting around since COVID is being spent. And when we see the problems Geopolitical, we see gas rising, putting more pressure on the consumer. But like I said, I think the retailers are bringing in what they perceive that they're going to be successful in moving out and We think they will. Speaker 400:23:05And then is it too conservative to think about the consumer electronics category And think about historical refresh rates. So I think there's a school of thought that in the Consumer electronics category and the home category, there was a massive pull forward on COVID. So is it too conservative to just think of historical refresh rates for premium audio and things of that nature and that's when things could rebound? Speaker 200:23:34Yes. I mean, what I had indicated on the call that I said that we think the markets would be hard pressed Well into next year, when you're looking at home theater and some of the things for the home that we sell, The refresh rates, it's not like a car where you move it out every 2 or 3 years. So the buy forward or pull forward that we had seen During the pandemic, when everybody was locked in, I think we've got another year or 18 months before we start to see a more normal pattern In consumer purchasing of consumer electronics for the home. There might be certain categories that will do well. Like I mentioned, our party speakers, it's a fairly new category. Speaker 200:24:24So that's something that we believe will do well. But the typical product, we see that it will take some time to get back to normal. Speaker 400:24:35Great. Lastly, as it pertains to the auto worker strike, I would think that you may be bufferedprotected To the extent that I think historically you're in some of the most popular products within Stellantis And it was my impression that they had built inventory perhaps in anticipation of the strikes. So how should we think about How can we monitor the strikes and the potential impact on EBITDA? Speaker 200:25:05Well, when we look at that, some of the plants that we received product from have not closed Or have not been shut down at this particular point, but we did see a slowdown in ordering. If the UAW strike continues longer, we will see a lagging effect on inventories on the dealers' lots, which will impact our aftermarket automotive sales. And certainly, closure of any plants that we pull merchandise or vehicles from We'll have an immediate effect on the automotive business. However, we have gains with our heavy duty truck manufacturers, Fleets and other OEMs outside of the big three automakers that are part of the UOW strike. So It's a little bit of a mixed bag. Speaker 200:26:02We are seeing increases in the other sectors of our OEM automotive business, but it could be offset by Some slowness due to closures. Speaker 400:26:12Thanks for taking my questions, Pat. Appreciate it. Speaker 200:26:15Very good, Tom. Thank you. Operator00:26:17Thank you. I'm currently showing no further questions. I'd like to hand the conference back over to Pat Lavelle for closing remarks. Speaker 200:26:36Okay. Thank you. As we look into the Q3, as I said to Tom, It's been our historically our Q3. We have a number of different programs that we do have scheduled for the quarter. So we're looking at growing our business sequentially, and hopefully the cuts that we put in place are significant enough for us to turn Profitable for the balance of the year. Speaker 200:27:04I want to thank you for taking the time in coming on the call this morning, and I wish you all a good day. Operator00:27:12This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day. Speaker 200:27:20Thank you.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallVOXX International Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) VOXX International Earnings HeadlinesGentex completes $175M acquisition of Voxx InternationalApril 3, 2025 | msn.comGentex Completes Acquisition of VOXX InternationalApril 1, 2025 | tipranks.comHere’s How to Claim Your Stake in Elon’s Private Company, xAIElon Musk has done it again. He’s developed a powerful new AI model that’s already turning heads — and turning the industry upside down. Some say it could threaten Google’s search engine dominance. Others believe it could mark the beginning of the end for ChatGPT.April 26, 2025 | Brownstone Research (Ad)Gentex Corporation Closes on its Acquisition of VOXX International CorporationApril 1, 2025 | prnewswire.comSHAREHOLDER INVESTIGATION: Halper Sadeh LLC Investigates BLUE, VOXX, CARA, CYTH on Behalf of ShareholdersFebruary 23, 2025 | morningstar.comVOXX International Corp Reports Fiscal Q3 2025 Results: $105.2 Million Revenue, $44. ...February 10, 2025 | gurufocus.comSee More VOXX International Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like VOXX International? Sign up for Earnings360's daily newsletter to receive timely earnings updates on VOXX International and other key companies, straight to your email. Email Address About VOXX InternationalVOXX International (NASDAQ:VOXX) manufactures and distributes automotive electronics, consumer electronics, and biometric products in the United States, Europe, and internationally. It offers automotive security, vehicle access, and remote start modules and systems; smart phone telematics applications; mobile multi-media infotainment products and rear-seat entertainment products, including overhead, seat-back, and headrest systems; rear observation and collision avoidance systems; 360 camera applications; satellite radios comprising plug and play, and direct connect models; cruise control systems; audio products; heated seats; interior lighting solutions; security and shock sensors; turn signal switches; puddle lamps; box lights; harnesses; electric vehicle sound systems; and logo lighting modules. The company also provides speakers; A/V receivers; home theater, and business and streaming music systems; on-ear and in-ear headphones; wired and wireless, and Bluetooth headphones and ear buds; soundbars; digital living network alliance compatible devices; high-definition television and wireless fidelity antennas; high-definition multimedia interface accessories; karaoke and infant/nursery products; home electronic accessories, such as cabling, power cords, and other connectivity products; performance enhancing electronics; TV universal remote controls; flat panel TV mounting systems; power supply systems and charging products; solar powered balcony systems; electronic equipment cleaning products; hearing aids and personal sound amplifiers; set-top boxes; and home and portable stereos. In addition, it offers iris identification and biometric security related products. The company was formerly known as Audiovox Corporation and changed its name to VOXX International Corporation in December 2011. VOXX International Corporation was founded in 1960 and is headquartered in Orlando, Florida.View VOXX International ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Markets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 5 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to VOXX Fiscal 20 24 Second Quarter Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. You will then hear an automated message advising your hand is raised. Operator00:00:24Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Glenn Weiner, President and Chief Executive Officer. Please go ahead, sir. Speaker 100:00:34Thank you, Norm. I appreciate it. Good morning, and welcome to VOXX International's fiscal 2024 Second Quarter Conference Call. My name is Glenn Wiener, President CEO of GW Communications, Investor Relations firm for Vox. Yesterday, we filed our Form 10 Q and issued our press release, both documents of which can be found in the Investor Relations section our website at www.voxxintl.com. Speaker 100:00:59Speaking from management Will be Pat Lavelle, Chief Executive Officer and Michael Storrs, Senior Vice President and Chief Financial Officer. Their remarks will be followed by questions and answers. As for today, I'd like to remind everyone that except for historical information contained herein, statements made on today's call and webcast that constitute forward looking statements are based on currently available information. The company assumes no responsibility to update any such forward looking statements, and I would like to point you The risk factors associated with our business, which are detailed in our Form 10 ks for the period ended February 28, 2023. Thank you for your continued support, and it's my pleasure to now turn the call over to Pat. Speaker 200:01:38Thanks, Glenn, and good morning, everyone. Not much has changed since our Q1 remarks in July. As the Global markets remain challenging. Consumer spending is down and the automakers are still having production issues. With that said, we saw some modest improvements in our business this quarter, which helped combat the overall softness in the economy. Speaker 200:02:04As we look out into the second half of the year, we expect to see top line growth compared to fiscal 2023 and to be profitable. The extent of our growth and profits, however, will be very much dependent on the state of the car markets, especially now with the UAW strike and, of course, The consumer, we're doing what we can to combat anything that comes our way and in 2Q, we took significant actions to do just that. We initiated a significant restructuring program, removing headcount and lowering our non essential spend across the company. We exited several third party agreements and restructured contracts to lower fees. We completed our OEM transition to Mexico for most of our OEM product lines, which will reduce costs and help improve margins. Speaker 200:02:56And we continue to work with our supply chain to redo pricing with more favorable terms, while moving out of our inventory positions to protect our balance sheet. We're essentially taking out everything we can based on lower sales volumes without impacting our ability to serve our customer and innovate. As for the 2Q quarter results, sales were down Approximately 10% year over year and up 1.5% sequentially. Gross profit improved by 190 basis Points driven by gains in our consumer segment. Operating expenses improved by over 5% and roughly 10% when you take out restructuring expenses. Speaker 200:03:39While we lost money in the quarter, our operating loss improved by $1,500,000 and we reported flat adjusted EBITDA, which was $3,300,000 better than 2Q of last year. Within our consumer segment, Consumer sales were down $10,000,000 year over year with Premium Audio down roughly $16,000,000 and other CE product sales up 6,000,000 Our Premium Audio business has been hit hard over the past 18 months after a great run during the early stages of the pandemic and the year that followed. Over the past few years, however, we faced global supply chain issues, a deteriorating global economy A very challenging retail environment with high inventory positions and rising interest rates, changing the way retailers operate. I'm not saying that we're out of the woods yet, but we are now we expect the trend to reverse I suppose growth again as we've retooled some of our products and have several new launches in the second half of the year with customer programs to support them. Premium Audio sales were up $5,600,000 sequentially And we're expecting to see continued sequential growth in the Q3 as it's the beginning of the holiday season and for our Q3 to come in higher than last year. Speaker 200:05:03The speaker category overall is down and many of our competitors are in the same position. In the most recent NPD report, the speaker market is down roughly 16% year to date and Klipsch Continues to maintain its number one market share. Further, some of our business was down compared to the same quarter last year Due to heavy promotions last year and a big program at Costco that launched in 2Q of last year. Now that's the past and what's driving our optimism for growth over the next few quarters are our new products. We have retooled our soundbar offering and have a slate of new soundbars coming to market during the second half of the year. Speaker 200:05:48The Klipsch Flexus will be launching before the year is out and it's the first ever product developed in tandem by Klipsch and Onkyo. Our new party speakers are doing very well and new launches are planned in the second half of the year. This is the hottest category in CE as I mentioned on our last call. We will soon be launching our new Klipsch Music City portable Bluetooth speakers that can broadcast to other Bluetooth speakers in stereo and other speakers around the house or outdoors. Hookup is very simple As you simply stream content through your devices. Speaker 200:06:29Our new subwoofers recently introduced this year are doing very well and have received excellent reviews, which should help continue to drive growth in this category. And as we announced previously, the Klipsch Reference Premier speakers will be on the Dodge Ram EV Trucks with an impressive 26 speaker sound system. This is the first entrance of the Klipsch brand into automotive, and we believe this is a new area of growth as other automotive manufacturers Recognize the value of the Klipsch brand. Other CE product sales, as I mentioned, were up $6,000,000 and the growth was driven By our new solar balcony power product launched by Schweiger in Germany and to a lesser extent our new RCA hearing aids, which We introduced this past May. Our accessory business overall continues to be especially our core products continue to be impacted By the economy, but more so by consumer spending. Speaker 200:07:30For example, TV sales are in a slump. And now what we don't sell TVs, but we do sell a lot of products that are attachment sales such as remotes, antennas, Virtually all of these categories are down, but during the Q2, we saw As for our Automotive segment, Automotive segment sales were down $1,800,000 or a little less than 5%. Our OEM business grew by $1,000,000 as some of the material shortages began to loosen and we fulfilled several back orders, particularly at code for remote start and security applications. VSM sales were up close to 5% and our rear seat entertainment programs were down for the quarter. OEM was up, but the obstacles we and the industry face continued to hinder our growth. Speaker 200:08:34Our aftermarket business was down for the quarter by $2,800,000 and we expected declines given the high inventory positions our customers have carried and the overall retail environment, but the good news is that the inventory bottleneck is beginning to loosen. The automotive aftermarket, overall continues to be challenged with some puts and takes. On one hand, we see an increase in car sales. However, the largest part of the increase is at fleets instead of retail car sales. And additionally, where car dealers would normally offer Aftermarket products to increase profitability, the tightness in inventory and strong demand has allowed them to just add Market adjustment increases to the stick at price. Speaker 200:09:21We now expect with the potential of an extended UAW strike that inventory tightness We'll continue. But with that said, the other OEM contracts that are in place, even at lower than projected volumes, Should help drive top line. However, it's the bottom line that we're focused on most. We instituted price increases, reworked our supply chain network, developed new technologies using different chips given availability and transition most of our production lines from Florida to Mexico. We're beginning to see the positive impact of all these moves And looking ahead, we have new programs with Ford for the Lincoln Navigator and Ford Expedition. Speaker 200:10:11Our new lighting program with Nissan starts next year And our program to support the new postal trucks also starts next year. As for our biometrics segment, sales came in Approximately 200,000 lower than the prior year and our budget. This was primarily due to lower licenses and again to some projects being pushed out. Everything that we have talked about on prior calls remains in place. We're continuing to work with car dealers, infrastructures, governments, financial service companies and on healthcare programs. Speaker 200:10:46With respect to the latter, We recently submitted our final prototype to our partner, which is now in the final step of validation. Production should begin by the middle of next year, And we expect other opportunities to arise with this customer and others once it's in the field and we are focused on growing our embedded solution portfolio. To sum it up, the Q2 was expected and we're not pleased with our results for the first half of the year. We've taken more aggressive actions to combat the economy and other issues we're facing and the past actions coupled with the recent restructuring will help improve margins And lower our costs. We expect growth in the second half of the year based on the contracts we have, the new programs we've secured And both the new products we've launched and will be launching. Speaker 200:11:38Of course, we're mindful of any further deterioration in the economy And we expect markets to remain hard pressed for the next year or so. If things worsen, we'll take more Action, but we believe we have made the necessary adjustments in our business to drive profitability in the second half and to start fiscal 2025 In a more competitive position. One last item to discuss before I turn the call over to Mike. As you may have seen in our earnings release and the Form 4 that was filed yesterday, we have a new strategic investor in VOXX, Gentex Corporation, A company that we currently do business with entered into a stock purchase agreement with Avalon Park LLC and Avalon Park Group Holding AG, both of which are controlled by Biya Tali, our President and one of VOXX's largest shareholders. Collectively, Avalon has agreed to sell 50 percent of its holdings to Gentex or approximately 3,100,000 shares in 2 separate transactions. Speaker 200:12:42The first transaction of 1,570,000 shares was completed on Friday at $10 per share, representing a 32.5 percent premium to our stock price as of October 5, the day prior to the transaction. The second transaction of the same amount will be in January 24, and the stock price will be based on the formula as noted in our release. When complete, Gentex will own approximately 15.1 percent of our Class A common stock and will become one of our 3 largest shareholders. When Biatt came on as President, one of his primary focus areas was strategic partnerships. This was probably his number one priority as we were looking to align with industry leaders to help drive growth and value in our business. Speaker 200:13:34And with Gentex, we have found a great partner as we are collaborating with them in both our biometric and automotive segments on current projects, while concurrently looking to drive innovation in our offerings to grow our joint businesses and market share. Steve Downing, who serves as CEO and President of Gentex also sits on our Board and this alliance is one that we believe holds great promise for our company And with that, I'll now turn the call over to Mike to review financials and then we'll open it for questions. Michael? Speaker 300:14:10Thanks, Pat, and good morning, everyone. We reported total second quarter net sales of 113,600,000 A decline of approximately $12,100,000 Within this, Automotive segment sales were down $1,800,000 Consumer segment sales were down $10,000,000 and biometric segment sales declined by approximately 100,000. While sales were down year over year, they were up sequentially by $1,700,000 and we're expecting improvements in the second half of the year. Within automotive, OEM product sales increased by $1,000,000 and aftermarket product sales declined by $2,800,000 And within the consumer, Premium Audio product sales declined by $16,000,000 while other CE product sales increased by 6,000,000 We reported gross margins of 25.2 percent, an improvement of 190 basis points Compared to Q2 last year and an improvement of 60 basis points sequentially. Automotive margins were essentially flat An increase was driven by the improvement in our consumer segment, which we anticipate will continue. Speaker 300:15:22If automotive volumes materialize as our customers We should see improvements in our automotive segment as well as with the relocation of manufacturing to Mexico now complete And other changes we've made to our infrastructure and supply chain. Our operating expenses improved by $2,100,000 Year over year as we continue to lower our costs. Selling expenses declined by $1,800,000 or 15.5 percent. G and A expenses declined by $1,600,000 or 8.5 percent and engineering and technical support expenses declined by 400,000. As Pat noted, during the Q2, we initiated a large restructuring program to lower our costs further in light of the current environment And incurred restructuring expenses of $2,000,000 in fiscal 2024 Q2 compared to $200,000 in the comparable fiscal 20 23 period. Speaker 300:16:21Excluding restructuring expenses, total operating expenses for the comparable second quarter periods Declined by $3,900,000 or close to 10%. We reported an operating loss of $8,500,000 compared to $10,000,000 in Q2 of last year and a net loss attributable to Box of $11,100,000 compared to 10,900,000 EBITDA in the 2nd quarter was a loss of $5,400,000 and adjusted EBITDA was essentially flat. This compares to an EBITDA loss of $6,800,000 and adjusted EBITDA loss of $3,300,000 in the Q2 of fiscal 2023. I'll note, EBITDA and adjusted EBITDA improved on a sequential basis by $2,200,000 $4,900,000 respectively. Through the 1st 6 months of fiscal 2024 compared to fiscal 2023, net sales were down 11.3% With Automotive segment sales down 3.9% and Consumer segment sales down 14.5%. Speaker 300:17:24Again, as Pat noted, we anticipate year over year growth in the second half of the year. Gross margins of 24.9% improved by 30 basis And we expect further improvements in the second half of the year as well for the reasons Pat's covered. Operating expenses improved by 3.8% Or 6% when excluding restructuring expenses and acquisition costs. On an operating basis, we lost $19,900,000 Compared to a loss of $16,700,000 and net loss attributable to VOXX in fiscal 2024 6 month period was $21,800,000 as compared to a net loss of $16,700,000 Lastly, we reported an EBITDA loss of $13,000,000 And adjusted EBITDA loss of $5,000,000 Moving on to the balance sheet. As of August 31, We had cash and cash equivalents of $5,900,000 which compares to $5,200,000 as of May 31 And $6,100,000 as of our fiscal 2023 year end of February 28. Speaker 300:18:30Our accounts receivable declined by approximately $21,000,000 And our inventory position declined by approximately $1,000,000 compared to fiscal 2023 Q4. Our inventory position declined by approximately $10,000,000 sequentially and as we move through the inventory during the holiday season, We expect our inventory balances decline further. Our total debt stood at $42,800,000 as compared to $39,200,000 as of February 28. The increase in total debt was driven by a $4,100,000 increase in our borrowings associated with our domestic credit facility, Offset by a $250,000 decline in our Florida mortgage and a $200,000 decline in the amount owed on the shareholder loan payable to Sharp as part of our joint venture. Total long term debt, net of debt issuance cost was $41,200,000 as of August 31st as compared to $37,500,000 as of February 28. Speaker 300:19:43Excuse me, as I said, our operating expenses improved by $2,100,000 year over year. So listen, I'd like to finish my remarks. And operator, we're now ready to open the call for questions. Operator00:19:58Thank you. Please wait for your name to be announced. Please stand by while we compile the Q and A roster. One moment for our first question please. Our first question comes from the line of Tom Forte with D. Operator00:20:25A. Davidson, your line is now open. Speaker 400:20:28Great. Thanks. I had a couple of questions, but I go one at a time. So first, congrats on the Gentex investment. Pat, can you talk at a high level about your opportunity to monetize EyeLock on a near term and a longer term basis? Speaker 200:20:43Well, when we look at EyeLock, as I said, the final prototype went over to our customer. We expect that everything will go well with that prototype and production for their Particular machine is scheduled for the middle of next year, which we believe we will be on it. It is a long term program. I can't get into much detail on it at this point, but it is a long term program, which will have material positive impact On EyeLock. Speaker 400:21:21And then second question, can we talk about sell in and sell through? So are you seeing any change in behavior for large consumer electronics retailers When we think about their willingness to add inventory and then on the sell through part, Do you think consumers are responding favorably to increased promotional activity within the consumer electronics category? Or do you feel like that's not very effective in today's current environment? Speaker 200:21:55Well, I think that when we look at Sell in, we look at the retailers being quite conservative with what they're taking in. We have not seen issues with their sell through. So they may they apparently are taking in the proper amount of product coming in. There will be promotions throughout the holiday season. It's generally our biggest quarter. Speaker 200:22:20But There is obviously, there's been a change in consumer behavior, with credit cards being at all time high, interest rates on credit And we know that we see shrinking savings accounts On consumers, so some of the pent up money that was sitting around since COVID is being spent. And when we see the problems Geopolitical, we see gas rising, putting more pressure on the consumer. But like I said, I think the retailers are bringing in what they perceive that they're going to be successful in moving out and We think they will. Speaker 400:23:05And then is it too conservative to think about the consumer electronics category And think about historical refresh rates. So I think there's a school of thought that in the Consumer electronics category and the home category, there was a massive pull forward on COVID. So is it too conservative to just think of historical refresh rates for premium audio and things of that nature and that's when things could rebound? Speaker 200:23:34Yes. I mean, what I had indicated on the call that I said that we think the markets would be hard pressed Well into next year, when you're looking at home theater and some of the things for the home that we sell, The refresh rates, it's not like a car where you move it out every 2 or 3 years. So the buy forward or pull forward that we had seen During the pandemic, when everybody was locked in, I think we've got another year or 18 months before we start to see a more normal pattern In consumer purchasing of consumer electronics for the home. There might be certain categories that will do well. Like I mentioned, our party speakers, it's a fairly new category. Speaker 200:24:24So that's something that we believe will do well. But the typical product, we see that it will take some time to get back to normal. Speaker 400:24:35Great. Lastly, as it pertains to the auto worker strike, I would think that you may be bufferedprotected To the extent that I think historically you're in some of the most popular products within Stellantis And it was my impression that they had built inventory perhaps in anticipation of the strikes. So how should we think about How can we monitor the strikes and the potential impact on EBITDA? Speaker 200:25:05Well, when we look at that, some of the plants that we received product from have not closed Or have not been shut down at this particular point, but we did see a slowdown in ordering. If the UAW strike continues longer, we will see a lagging effect on inventories on the dealers' lots, which will impact our aftermarket automotive sales. And certainly, closure of any plants that we pull merchandise or vehicles from We'll have an immediate effect on the automotive business. However, we have gains with our heavy duty truck manufacturers, Fleets and other OEMs outside of the big three automakers that are part of the UOW strike. So It's a little bit of a mixed bag. Speaker 200:26:02We are seeing increases in the other sectors of our OEM automotive business, but it could be offset by Some slowness due to closures. Speaker 400:26:12Thanks for taking my questions, Pat. Appreciate it. Speaker 200:26:15Very good, Tom. Thank you. Operator00:26:17Thank you. I'm currently showing no further questions. I'd like to hand the conference back over to Pat Lavelle for closing remarks. Speaker 200:26:36Okay. Thank you. As we look into the Q3, as I said to Tom, It's been our historically our Q3. We have a number of different programs that we do have scheduled for the quarter. So we're looking at growing our business sequentially, and hopefully the cuts that we put in place are significant enough for us to turn Profitable for the balance of the year. Speaker 200:27:04I want to thank you for taking the time in coming on the call this morning, and I wish you all a good day. Operator00:27:12This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day. Speaker 200:27:20Thank you.Read morePowered by