VOXX International Corporation Reports Fiscal 2015 First Quarter Results - Cincinnati News, FOX19-WXIX TV

VOXX International Corporation Reports Fiscal 2015 First Quarter Results

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SOURCE VOXX International Corporation (VOXX)

HAUPPAUGE, N.Y., July 10, 2014 /PRNewswire/ -- VOXX International Corporation (NASDAQ: VOXX), today announced financial results for its Fiscal 2015 first quarter ended May 31, 2014. 

Pat Lavelle, VOXX International's President and CEO stated, "Our first quarter results, while lower than last year, came in as expected and our guidance for the year remains unchanged.  We had previously communicated that our first quarter would be impacted by weather and a soft retail environment, similar to our fiscal 2014 fourth quarter.  Our product margins are however trending upwards and expenses are in line with our planned increase of 4-5%.  For the second quarter, we expect to see sales similar to what we posted in last year's second quarter but with higher margins and we have every reason to believe sell-in at retail will be strong as we load-in products for the all-important holiday season."

Lavelle continued, "Demand for some of our new Premium Audio products, such as our new Reference speaker lines under Klipsch and our Concert series under Jamo has been strong and we continue to receive positive reception from our retail partners around the upcoming launch of our action cameras and biometric products.  While both of these new categories will have a positive impact on our results this year, it will not be major as we will launch them later in the fiscal year.  We expect these categories, as well as sales from the recently announced Car Connection insurance discount programs, to have a more meaningful impact on our sales and profitability next year.

First Quarter Results

Net sales for the Fiscal 2015 first quarter ended May 31, 2014 were $186.9 million compared to $193.0 million reported in the comparable year-ago period, a decline of 3.1%.

Automotive sales for the Fiscal 2015 first quarter were $102.4 million, a decline of 1.7% as compared to $104.2 million reported in the Fiscal 2014 first quarter, primarily as a result of a customer requested short-term suspension of an OEM program.  The Company expects that this issue will have little or no effect on the second quarter.  As anticipated, the Company's Venezuela operation continues to be negatively affected by the political situation in that country, and last year's first quarter included sales from two OEM customers that were not expected to repeat this year.  Additionally, higher sales of the Company's Car Connection Telematics product, as well as continued improved tuner and antenna sales at VOXX Hirschmann offset some of the declines. 

Premium Audio sales for the Fiscal 2015 first quarter were $35.2 million, a decline of 12.3% as compared to $40.2 million reported in the comparable year-ago period.  The Company is gearing up for the second quarter launch of several new product lines and has purposely curtailed sales to some key retailers to make way for these new inventory load ins.  Partially offsetting these declines were higher sales of cinema speaker products as the Company continues to see increased penetration in this market.

Consumer Accessories sales for the Fiscal 2015 first quarter were $49.1 million, an increase of 1.7% as compared to $48.3 million reported in the Fiscal 2014 first quarter.  Increased sales in the Company's Mexican subsidiary combined with a business plan shift in that market fueled some of the growth.  Additionally, higher sales of wireless and Bluetooth speakers, reception products, as well as higher sales in the Company's European markets also contributed to the increase, and were partially offset by the planned declines in sales of clock radios, digital voice recorders and MP3 players as the Company continues to exit these categories.

As a percentage of sales for the Fiscal 2015 first quarter ended May 31, 2014, Automotive represented 54.8%, Premium Audio represented 18.8% and Consumer Accessories represented 26.3%.  As a percentage of sales for the Fiscal 2014 first quarter ended May 31, 2013, Automotive represented 54.0%, Premium Audio represented 20.8% and Consumer Accessories represented 25.0%.

The gross margin for the Fiscal 2015 first quarter was 28.4%, an increase of 20 basis points as compared to 28.2% for the same period last year.  The increase was primarily driven by higher gross margins in the Automotive segment and partially offset by declines in gross margins in the Premium Audio and Consumer Accessories segments.  This is due largely to product mix and the clearing out of older product lines to make way for new product introductions. 

Operating expenses for the Fiscal 2015 first quarter were $53.5 million, an increase of 4.6% as compared to operating expenses of $51.1 million reported in the comparable year-ago period.  As previously discussed the Company continues to hire new engineers to support future programs, and has increased advertising and marketing expenses for the new launches.  Offsetting these increases were lower sales commissions and stock option expense compared to the prior year.

The Company reported an operating loss of $0.4 million for the Fiscal 2015 first quarter as compared to operating income of $3.4 million reported in the Fiscal 2014 first quarter.  Lower sales volumes and higher expenses contributed to the variance for the year-over-year periods, and were partially offset by higher gross margins.

The Company reported net income of $0.5 million and net income per diluted share of $0.02 for the Fiscal 2015 first quarter as compared to net income of $2.1 million and net income per diluted share of $0.09 for the comparable period last year.  Net income for the Fiscal 2015 first quarter was favorably impacted by improved performance of the Company's equity investment ("ASA") and a decrease in restructuring charges, offset by lower net sales.  Net income for the Fiscal 2014 first quarter was favorably impacted by the absence of acquisition and certain other professional fees due to a decrease in related activities as compared to previous periods, partially offset by restructuring charges.  Additionally, approximately $2 million in engineering expense reimbursements which were slated to be recognized for the first quarter will now be realized in the second quarter and keep us on our internal plan.  As of today, we have received this payment.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the Fiscal 2015 first quarter was $6.1 million as compared to EBITDA of $9.2 million reported in the Fiscal 2014 first quarter. 

Mr. Lavelle concluded, "Our team remains focused on cash generation and delivering sustainable results that will increase shareholder value.  We continue to strengthen the Company by adding staff to support both existing and new projects, primarily within our Automotive segment, but also in support of our other lines of business.  Our capital structure should also improve this year and barring any acquisitions, we intend to continue to pay down our debt.  Finally, we continually look at new growth categories that can fuel our business and I have every reason to believe we are positioned well for organic growth next year, with potential upside to our numbers this year if the global economies improve."

Non-GAAP Measures

EBITDA is not a financial measure recognized by GAAP. EBITDA represents net income, computed in accordance with GAAP, before interest expense, taxes and depreciation and amortization.  We present EBITDA in this release and in our Form 10-Q because we consider it to be useful and appropriate supplemental measure of our performance. 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. EBITDA should not be assessed in isolation from or construed as a substitute for net income prepared in accordance with GAAP. EBITDA is not intended to represent, and should not be considered to be a more meaningful measure than, or an alternative to, measures of operating performance as determined in accordance with GAAP. 

Conference Call Information

The Company will be hosting its conference call on Friday, July 11, 2014 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: 66761159).  For those unable to join, a replay will be available approximately four hours after the call has been completed and will last for one week (replay number: 855-859-2056; international replay: 404-537-3406; conference ID: 66761159).

About VOXX International Corporation

VOXX International Corporation (NASDAQ:VOXX) is the new name for Audiovox Corporation, a company that was formed over 45 years ago as Audiovox that has grown into a worldwide leader in many automotive and consumer electronics and accessories categories, as well as premium high-end audio.  Through its wholly-owned subsidiaries, VOXX International proudly is recognized as the #1 premium loudspeaker company in the world, and has #1 market positions in automotive video entertainment and remote starts, digital TV tuners and digital antennas.  The Company's brands also hold #1 market share for TV remote controls and reception products and leading market positions across a wide-spectrum of other consumer and automotive segments.

Today, VOXX International Corporation is a global company, with 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 key domestic brands are Klipsch®, RCA®, Invision®, Jensen®, Audiovox®, Terk®, Acoustic Research®, Advent®, Code Alarm®, CarLink®, 808®, AR for Her®, and Prestige®. International brands include Hirschmann Car Communication®, Klipsch®, Jamo®, Energy®, Mirage®, Mac Audio®, Magnat®, Heco®, Schwaiger®, Oehlbach® and Incaar™.  The Company continues to drive innovation throughout all of its subsidiaries, and maintains its commitment to exceeding the needs of the consumers it serves.  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, 2014.

Company Contact:
Glenn Wiener, President
GW Communications
Tel: 212-786-6011
Email: gwiener@GWCco.com

 

 

VOXX International Corporation and Subsidiaries

Consolidated Balance Sheets

(In thousands)




May 31, 2014


February 28, 2014

Assets


(unaudited)




Current assets:







Cash and cash equivalents


$

10,926



$

10,603


Accounts receivable, net


121,971



147,054


Inventory, net


143,173



144,339


Receivables from vendors


3,484



2,443


Investment securities, current


7,654



-


Prepaid expenses and other current assets


16,357



15,897


Income tax receivable


4,276



2,463


Deferred income taxes


2,862



3,058


Total current assets


310,703



325,857


Investment securities


12,413



14,102


Equity investments


21,385



20,628


Property, plant and equipment, net


83,244



83,222


Goodwill


117,464



117,938


Intangible assets, net


172,654



174,312


Deferred income taxes


775



760


Other assets


9,808



10,331


Total assets


$

728,446



$

747,150


Liabilities and Stockholders' Equity







Current liabilities:







Accounts payable


$

64,827



$

55,373


Accrued expenses and other current liabilities


52,840



59,247


Income taxes payable


3,125



3,634


Accrued sales incentives


14,642



17,401


Deferred income taxes


10



9


Current portion of long-term debt


6,530



5,960


Total current liabilities


141,974



141,624


Long-term debt


84,218



103,222


Capital lease obligation


5,971



6,114


Deferred compensation


5,684



5,807


Other tax liabilities


10,781



11,060


Deferred tax liabilities


34,991



34,963


Other long-term liabilities


14,470



14,776


Total liabilities


298,089



317,566


Commitments and contingencies







Stockholders' equity:







Preferred stock


-



-


Common stock


277



277


Paid-in capital


291,035



290,960


Retained earnings


159,060



158,571


Accumulated other comprehensive loss


(1,664)



(1,873)


Treasury stock


(18,351)



(18,351)


Total stockholders' equity


430,357



429,584


Total liabilities and stockholders' equity


$

728,446



$

747,150


 

 

 

VOXX International Corporation and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

(In thousands, except share and per share data)

(unaudited)




Three Months Ended
May 31,



2014


2013

Net sales


$

186,899



$

192,972


Cost of sales


133,846



138,459


Gross profit


53,053



54,513


Operating expenses:







Selling


14,596



13,123


General and administrative


29,615



28,938


Engineering and technical support


9,261



8,735


Restructuring expense


-



303


   Total operating expenses


53,472



51,099


Operating (loss) income


(419)



3,414


Other income (expense):







Interest and bank charges


(1,608)



(1,980)


Equity in income of equity investees


1,931



1,756


Other, net


653



16


   Total other income (expense), net


976



(208)


Income before income taxes


557



3,206


Income tax expense


68



1,064


Net income


$

489



$

2,142


Other comprehensive income (loss):







Foreign currency translation adjustments


(441)



(2,320)


Derivatives designated for hedging


640



311


Pension plan adjustments


10



6


Other comprehensive income (loss), net of tax


209



(2,003)


Comprehensive income


$

698



$

139









Net income per common share (basic)


$

0.02



$

0.09


Net income per common share (diluted)


$

0.02



$

0.09


Weighted-average common shares outstanding (basic)


24,518,510



23,720,275


Weighted-average common shares outstanding (diluted)


24,544,535



23,946,638


 







VOXX International Corporation and Subsidiaries

Reconciliation of GAAP Net Income to EBITDA

(In thousands)











 Quarter Ended  





 May 31 

 May 31 





2014

2013







Net Income



489

2,142

Adjustments:






Interest expense and bank charges


1,608

1,980


Depreciation and amortization


3,933

4,005


Income tax expense



68

1,064

EBITDA



6,098

9,191

 

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