HAUPPAUGE, N.Y., July 10, 2017 /PRNewswire/ -- VOXX
International Corporation (NASDAQ: VOXX), today announced financial
results for its Fiscal 2018 first quarter ended May 31, 2017.
Commenting on the Company's first quarter performance,
Pat Lavelle, President and CEO
stated, "Led by a 17.4% increase in Premium Audio sales, we posted
modest top-line growth. However, gross margins came in lower in
this segment, as we had several promotions to clear inventory with
a number of new product launches planned. We expect margins to
improve in the second quarter and return to normal throughout the
year. New products and partnerships within our Automotive and
Consumer Accessories segments, new products coming to market in
Premium Audio, and the launch of our new EVO-based rear-seat
infotainment solution, scheduled for the second and third quarters,
should improve top-line outlook."
Lavelle continued, "The news of our pending sale of Hirschmann
dominated the quarters' activity. While Hirschmann has been a great
contributor to our business and has industry-leading technology, we
believe the opportunity to sell at the proposed value is a benefit
for our shareholders. Upon completion, we will have a clean balance
sheet, lower working capital needs and we expect, greater cash
flow. VOXX will continue to operate in the Automotive segment, with
significant OEM production capabilities, a number of contracts in
place, and an expanded assortment of aftermarket products. This
transaction will give us a greater concentration of business in
North America and enable us to
leverage synergies within our footprint, especially as we seek
complementary acquisitions, to drive better returns."
First Quarter Performance (for the periods ended May 31, 2017 and May 31,
2016)
Net sales for the Fiscal 2018 first quarter were $159.1 million, an increase of $3.6 million or 2.3% as compared to $155.5 million reported in the comparable
year-ago period.
- Automotive segment sales were $81.3
million as compared to $81.4
million. Automotive segment sales were positively influenced
by an increase in domestic OEM sales, new sales related to the
Company's acquisition of Rosen Electronics, higher aftermarket
sales for overhead and headrest DVD systems and higher tuner and
antenna sales internationally. Offsetting these increases were
lower sales of satellite radio products, and lower sales related to
its international OEM manufacturing line.
- Premium Audio segment sales were $37.7
million as compared to $32.1
million, an increase of $5.6
million or 17.4%. Driving the year-over-year increase were
higher sales of HD wireless speakers, wireless sound bars,
multi-room streaming audio systems, and home entertainment
speakers, partially offset by lower sales of commercial
speakers.
- Consumer Accessories segment sales were $39.9 million as compared to $41.7 million, a decline of $1.8 million or 4.2%. The Consumer Accessories
segment experienced higher international sales, primarily due to
digital broadcasting platform upgrades in Europe, as well as higher sales of its Project
Nursery product line and wireless speakers. Offsetting these
increases were lower sales of reception and power products, action
cameras and other product lines.
The gross margin for the Fiscal 2018 first quarter came in at
27.5% as compared to 29.7% for the same period last year, a
decrease of 220 basis points.
- Automotive segment margins of 29.4% declined by 60 basis
points. The Company experienced higher margins related to an
increase in sales of higher margin products within its OEM
manufacturing lines and decreased sales of lower margin fulfillment
products, such as satellite radio, offset by lower margins
associated with tuner and antenna products due to price reductions
on certain products.
- Premium Audio segment margins of 27.0% declined by 760 basis
points. This was primarily a result of heavy promotions of older
sound bar models that the Company is phasing out to make way for a
new line of products, many of which will be introduced this Fiscal
year, as well as lower margins associated with some of the newer
wireless sound bars and speakers. As an offset, the segment
experienced an increase in sales of certain higher margin products,
such as home entertainment speakers.
- Consumer Accessories segment margins of 23.8% declined by 90
basis points. The year-over-year decline was primarily related to
product mix. During the comparable quarters, lower sales of
reception and power products negatively impacted gross margins,
whereas higher sales of Project Nursery product lines, lower
fulfilment sales and an improvement in the international product
mix were offsetting factors.
Operating expenses for the Fiscal 2018 first quarter were
$51.6 million as compared to
$53.2 million in the Fiscal 2017
first quarter, a reduction of $1.6
million or 3.1%. Selling, general and administrative
expenses increased by $1.2 million,
primarily as a result of higher advertising expenses, higher
expenses associated with system upgrades and a modest increase in
salary and benefit expenses, partially offset by lower occupancy
costs and professional fees. This was offset by a $2.9 million reduction in engineering and
technical support expenses, which was primarily a result of lower
research and development expenses, most of which were driven by
timing associated with customer reimbursements for development
services in both the Fiscal 2018 and Fiscal 2017 first
quarters. Additionally, the Company incurred lower research
and development expenses in other groups as certain products are
nearing their launch dates.
The Company reported an operating loss of $7.8 million in its Fiscal 2018 first quarter as
compared to an operating loss of $7.1
million in the comparable year-ago period. Net loss
attributable to VOXX International Corporation was $3.0 million or a loss per basic and diluted
share of $0.13, as compared to a net
loss attributable to VOXX International Corporation of $4.3 million or a loss per basic and diluted
share of $0.18 in the Fiscal 2017
first quarter.
The Company reported negative Earnings before interest, taxes,
depreciation and amortization ("EBITDA") of $1.3 million and negative Adjusted EBITDA of
$1.1 million for the Fiscal 2018
first quarter. This compares to EBITDA of $0.1 million and Adjusted EBITDA of $0.3 million for the comparable year-ago
period.
On June 25, 2017, the Company
entered into a definitive agreement to sell Hirschmann Car
Communication GmbH and its worldwide subsidiaries ("Hirschmann") to
a subsidiary of TE Connectivity Ltd. (NYSE: TEL). Under the terms
of the Stock Purchase Agreement, TE Connectivity ("TE") will
acquire Hirschmann for an enterprise value of 148.5 million Euro. Based on the Euro to U.S.
dollar conversion (1 Euro =
$1.12), this equates to approximately
$166.0 million. The final purchase
price is subject to further net cash and working capital
adjustments. VOXX International (Germany) GmbH is the selling entity in this
transaction. This transaction is subject to regulatory approval and
customary closing conditions and the expected close, subject to
approvals, is anticipated to be on August
31, 2017.
Conference Call and Webcast Information
VOXX
International will be hosting its conference call on Tuesday, July 11, 2017 at 10:00 a.m. ET. Interested parties can participate
by visiting www.voxxintl.com, and clicking on the webcast in the
Investor Relations section or via teleconference (toll-free number:
877-303-9079; international: 970-315-0461 / conference ID:
49503688).
Non-GAAP Measures
EBITDA, Adjusted EBITDA and Diluted
Adjusted EBITDA per common share are not financial measures
recognized by GAAP. EBITDA represents net income (loss), 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.
Depreciation, amortization and stock-based compensation are
non-cash items. Diluted Adjusted EBITDA per common share represents
the Company's diluted earnings per common share based on Adjusted
EBITDA.
We present EBITDA, Adjusted EBITDA and Diluted Adjusted EBITDA
per common share in this Form 10-Q because we consider them to be
useful and appropriate supplemental measures of our performance.
Adjusted EBITDA and diluted adjusted earnings per common share help
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 non-recurring 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, Adjusted EBITDA and Diluted Adjusted EBITDA per
common share 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 Automotive, Consumer Electronics, Consumer Accessories
and Premium Audio. Today, the Company has an extensive distribution
network that includes power retailers, mass merchandisers, 12-volt
specialists and most of the world's leading automotive
manufacturers. The Company has an international footprint in
Europe, Asia, Mexico
and South America, and a growing
portfolio, which now comprises over 30 trusted brands. Among the
Company's brands are Klipsch®, RCA®, Invision®, Jensen®, Audiovox®,
Terk®, Acoustic Research®, Advent®, Code Alarm®, Car Connection®,
808®, AR for Her®, Prestige®, EyeLock, Hirschmann Car
Communication®, Jamo®, Energy®, Mirage®, Mac Audio®, Magnat®,
Heco®, Schwaiger®, Oehlbach®, and Incaar™. For additional
information, please visit our Web site at www.voxxintl.com.
Safe Harbor Statement
Except for historical
information contained herein, statements made in this release that
would constitute forward-looking statements 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 risks that may result from changes in the
Company's business operations; our ability to keep pace with
technological advances; significant competition in the automotive,
premium audio and consumer accessories 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 concerns regarding the European debt
crisis; restrictive debt covenants; the possibility that the review
of our prior filings by the SEC may result in changes to our
financial statements; and the possibility that stockholders or
regulatory authorities may initiate proceedings against VOXX
International Corporation and/or our officers and directors as a
result of any restatements. Risk factors associated with our
business, including some of the facts set forth herein, are
detailed in the Company's Form 10-K for the fiscal year ended
February 28, 2017.
Company Contact:
Glenn Wiener, President
GW Communications
Tel: 212-786-6011
Email: gwiener@GWCco.com
- Tables to Follow –
VOXX International
Corporation and Subsidiaries
|
Consolidated
Balance Sheets (In thousands, except share and per share
data)
|
|
|
|
May 31,
2017
|
|
February 28,
2017
|
Assets
|
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
8,060
|
|
|
$
|
7,800
|
|
Accounts receivable,
net
|
|
89,888
|
|
|
90,641
|
|
Inventory,
net
|
|
165,409
|
|
|
153,053
|
|
Receivables from
vendors
|
|
831
|
|
|
665
|
|
Prepaid expenses and
other current assets
|
|
29,181
|
|
|
19,593
|
|
Income tax
receivable
|
|
1,682
|
|
|
1,596
|
|
Total current
assets
|
|
295,051
|
|
|
273,348
|
|
Investment
securities
|
|
9,748
|
|
|
10,388
|
|
Equity
investments
|
|
21,216
|
|
|
21,926
|
|
Property, plant and
equipment, net
|
|
85,182
|
|
|
81,601
|
|
Goodwill
|
|
105,799
|
|
|
103,212
|
|
Intangible assets,
net
|
|
175,732
|
|
|
176,289
|
|
Deferred income
taxes
|
|
23
|
|
|
23
|
|
Other
assets
|
|
1,624
|
|
|
1,699
|
|
Total
assets
|
|
$
|
694,375
|
|
|
$
|
668,486
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
71,669
|
|
|
$
|
61,143
|
|
Accrued expenses and
other current liabilities
|
|
54,924
|
|
|
42,476
|
|
Income taxes
payable
|
|
1,369
|
|
|
3,077
|
|
Accrued sales
incentives
|
|
12,078
|
|
|
13,154
|
|
Current portion of
long-term debt
|
|
10,420
|
|
|
10,217
|
|
Total current
liabilities
|
|
150,460
|
|
|
130,067
|
|
Long-term debt, net
of debt issuance costs
|
|
102,296
|
|
|
97,747
|
|
Capital lease
obligation
|
|
2,792
|
|
|
1,400
|
|
Deferred
compensation
|
|
3,868
|
|
|
4,224
|
|
Deferred income tax
liabilities
|
|
27,773
|
|
|
30,155
|
|
Other tax
liabilities
|
|
3,244
|
|
|
3,194
|
|
Other long-term
liabilities
|
|
10,946
|
|
|
10,384
|
|
Total
liabilities
|
|
301,379
|
|
|
277,171
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock: No
shares issued or outstanding
|
|
—
|
|
|
—
|
|
Common
stock:
|
|
|
|
|
Class A, $.01 par
value, 60,000,000 shares authorized, 24,067,444 shares issued and
21,899,370 shares outstanding at both May 31, 2017 and February 28,
2017
|
|
256
|
|
|
256
|
|
Class B Convertible,
$.01 par value, 10,000,000 shares authorized, 2,260,954 shares
issued and outstanding
|
|
22
|
|
|
22
|
|
Paid-in
capital
|
|
295,734
|
|
|
295,432
|
|
Retained
earnings
|
|
156,338
|
|
|
159,369
|
|
Accumulated other
comprehensive loss
|
|
(37,715)
|
|
|
(43,898)
|
|
Treasury stock, at
cost, 2,168,074 shares of Class A Common Stock at both May 31, 2017
and February 28, 2017
|
|
(21,176)
|
|
|
(21,176)
|
|
Total Voxx
International Corporation stockholders' equity
|
|
393,459
|
|
|
390,005
|
|
Non-controlling
interest
|
|
(463)
|
|
|
1,310
|
|
Total stockholders'
equity
|
|
392,996
|
|
|
391,315
|
|
Total liabilities and
stockholders' equity
|
|
$
|
694,375
|
|
|
$
|
668,486
|
|
VOXX International
Corporation and Subsidiaries
|
Consolidated
Statements of Operations and Comprehensive Income
(Loss)
|
(In thousands,
except share and per share data)
|
(unaudited)
|
|
|
|
Three Months
Ended
May 31,
|
|
|
2017
|
|
2016
|
Net sales
|
|
$
|
159,103
|
|
|
$
|
155,456
|
|
Cost of
sales
|
|
115,364
|
|
|
109,355
|
|
Gross
profit
|
|
43,739
|
|
|
46,101
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling
|
|
13,792
|
|
|
12,664
|
|
General and
administrative
|
|
27,192
|
|
|
27,071
|
|
Engineering and
technical support
|
|
10,594
|
|
|
13,479
|
|
Total
operating expenses
|
|
51,578
|
|
|
53,214
|
|
Operating
loss
|
|
(7,839)
|
|
|
(7,113)
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
Interest and bank
charges
|
|
(1,913)
|
|
|
(1,695)
|
|
Equity in income of
equity investees
|
|
1,803
|
|
|
1,808
|
|
Other, net
|
|
(1,020)
|
|
|
(512)
|
|
Total other
expense, net
|
|
(1,130)
|
|
|
(399)
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(8,969)
|
|
|
(7,512)
|
|
Income tax
benefit
|
|
(4,063)
|
|
|
(1,392)
|
|
Net loss
|
|
(4,906)
|
|
|
(6,120)
|
|
Less: net loss
attributable to non-controlling interest
|
|
(1,875)
|
|
|
(1,812)
|
|
Net loss attributable
to Voxx International Corporation
|
|
$
|
(3,031)
|
|
|
$
|
(4,308)
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
Foreign
currency translation adjustments
|
|
7,359
|
|
|
4,196
|
|
Derivatives designated for hedging
|
|
(1,052)
|
|
|
(491)
|
|
Pension
plan adjustments
|
|
(120)
|
|
|
(58)
|
|
Unrealized
holding loss on available-for-sale investment securities, net of
tax
|
|
(4)
|
|
|
(5)
|
|
Other comprehensive income, net of tax
|
|
6,183
|
|
|
3,642
|
|
Comprehensive income
(loss) attributable to Voxx International Corporation
|
|
$
|
3,152
|
|
|
$
|
(666)
|
|
|
|
|
|
|
Net loss per common
share attributable to Voxx International Corporation
(basic)
|
|
$
|
(0.13)
|
|
|
$
|
(0.18)
|
|
|
|
|
|
|
Net loss per common
share attributable to Voxx International Corporation
(diluted)
|
|
$
|
(0.13)
|
|
|
$
|
(0.18)
|
|
|
|
|
|
|
Weighted-average
common shares outstanding (basic)
|
|
24,160,324
|
|
|
24,160,324
|
|
Weighted-average
common shares outstanding (diluted)
|
|
24,160,324
|
|
|
24,160,324
|
|
Reconciliation of
GAAP Net Income (Loss) to
|
EBITDA, Adjusted
EBITDA and Diluted Adjusted EBITDA per Common Share
|
|
|
|
Three Months
Ended
May 31,
|
|
|
2017
|
|
2016
|
Net income
attributable to Voxx International Corporation
|
|
$
|
(3,031)
|
|
|
$
|
(4,308)
|
|
Adjustments:
|
|
|
|
|
Interest expense and
bank charges (1)
|
|
1,676
|
|
|
1,588
|
|
Depreciation and
amortization (1)
|
|
4,137
|
|
|
4,243
|
|
Income tax
benefit
|
|
(4,063)
|
|
|
(1,392)
|
|
EBITDA
|
|
(1,281)
|
|
|
131
|
|
Stock-based
compensation
|
|
142
|
|
|
175
|
|
Adjusted
EBITDA
|
|
$
|
(1,139)
|
|
|
$
|
306
|
|
Diluted income per
common share
|
|
$
|
(0.13)
|
|
|
$
|
(0.18)
|
|
Diluted Adjusted
EBITDA per common share
|
|
$
|
(0.05)
|
|
|
$
|
0.01
|
|
|
(1) For purposes of
calculating Adjusted EBITDA for the Company, interest expense and
bank charges, as well as depreciation and amortization have been
adjusted in order to exclude the non-controlling interest portion
of these expenses attributable to EyeLock LLC.
|
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SOURCE VOXX International Corporation