VOXX International (VOXX) 13 Jul 202021 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the VOXX International's First Quarter Conference Call. [Operator Instructions].Please be advised that today’s call is being recorded. [Operator Instructions] I would now like to hand the call over to Glenn Wiener, Investor Relations. Please go ahead.

Thank you, Michelle. to fiscal welcome conference first and call. morning VOXX XXXX International’s quarter Good

was SEC, July with a Form the filed Our XX-K our of the can found after website. close IR section documents press market and on Both Friday, XX. be on release issued we

and hour today completion after is Internet, of live be will this over webcast call replay available the Our the call. being a approximately X

Senior then Officer; Vice will today Pat President and be Officer. Michael Executive will questions. and Stoehr, the and Speaking prepared from management for Both President and Lavelle, Financial open Chief remarks, Chief call have we up will

Our and Chairman information. on to are The associated like and based such February webcast any would everyone also over to will I XX, remind that available for update our XXXX. and in except forward-looking Pat? responsibility detailed on our that for currently you point the with the Lavelle. would today's questions. XX-K I call constitute contained Form is statements forward-looking made available I period to to call historical turn are Company would statements to for ended factors John Founder, risk business, no like information assumes Shalam, statements, now the Pat which herein,

good Thank and everyone. you Glenn, morning,

last We automotive sales were Orlando, and they were the were The sales would was. anticipated, impacted I shutdown, and slow in it the given off COVID idling call our Jersey. the facilities of for the down through a XXXX same of side production better domestic and closure height year-end by the Consolidated from the of than period indicated was indeed fiscal all OEM be the on first the our As considerably. were few May although first New quarter weeks quarter on of $XX.X ago, million year. COVID-XX time manufacturers, period impact March still

the majority and of across the closure XX-volt sales retailers country. hit were of the automotive dealers new aftermarket Our by car

for large Amazon, April of our we only car our was closure fact, for month On and venues. food produce commercial to over large which as the a for saw the down was were retailers facility in remained increases Klipsch movie Online worst of essentials, sold large up we by picked The this most where at side, in production all others. sales In equally open. focusing We Arkansas bright us as impacted shut on forced such the XX spot speakers reported years. to and some well, the retailers retailers, Costco but offset part theaters by where that be of and activity mostly Wal-Mart, brick-and-mortar consumer quarter.

purchases based revolver, on from to concerns inventory the support liquidity of due our third trade moving and expenses. system, business furloughing As reduction $XX XX% third about in cut acquisition, moved for repurchase to this travel, we achieve $X determine operating was across severity offset to shutdown, in overhead, I said pandemic. stock XX% and length down workers, an able my call, $X.X all million were nationwide quarter, quarter quarter nearly as February. the in partially by operations We possible in improvement. the quickly advertising eliminating looming quarter pausing cognizant our the were of slash into VSM XX% by banking and cash million we the the on reduced in workforce, our over overhead all we grew could until which to party outside the program, a began generally back expenses, Overall, on of last the core We we first our initial problems expecting and a the preserving which million reducing to salaries remaining shows,

Our operating than better loss projected. was in $X.X which we million, at came

we a In over, from up is from far with cautiously remain XX% quarter, pandemic optimistic. saw rebound we the June, this sales of the However, year-over-year. impact but our first second month

portion we sales, the saw demand, well due aftermarket VSM good domestically is and accessory ease opened. as up, from some expect to were pent of acquisitions premium slowly we additional and a audio country the we DEI and Although internationally move forward. up as and products Sales both consumer contributions automotive things fulfillment as and

down in On were higher higher sales forecasted. in came OEM August. basis, than as anticipate Our but we a consolidated and expected, sales July

balance the was we hit gradual should OEM ASA, for our expect first improvement joint hard and on but with see as As improvement aftermarket own [Indiscernible] groups we the at profitable. in of remained our to segment, quarter, year venture automotive XX% the the well

seeing bodes an are uptick RV production, forward. for We well going in which them

We a we several improve of is group. our savings be acquisition we competitor end within expect by base next the ours this and loyal the security and G&A VSM realize over the have target to with million expect Our of By year. dollars costs, into eliminate talented Last longstanding remote of in number manufacturing the of week, Florida synergies to customer moving moved brands, production one Jersey, of Electronics powerful on aftermarket announced and the Directed efficiencies two and start and remove New There we majority Florida, anticipated acquired a will acquisition have to of space, to business. we August. XXX% the are employee engineering we completed realized, facility facilities expenses.

own telematics We also strengthening Solutions added business Connected their Car transaction, in the offering. our

million valued million transaction. million return, $XX net the Accounts The we validation. only $X.X inventory positives reserves, highlight of reserves. at property, and engineering Let of receivables testing of net of approximately intellectual and received in $X.X software and cash this and systems payment all was me computer

and Form assumed we For liabilities. certain release, also the X-K,

an a security telematics acquired, With unquestioned we market stronger with we start line, the leader plus categories, and our the remote brands own, network. the distribution are product in and expanded

year. sales again, of $XX the sales, such in But Collections, be in we generate made with to lower the investments due annualized have to liabilities the bulk this be And with we for two have approximately assumed this and as next automotive on one the we expect we we are one Amazon cash barring a able A/R in inventory note, new expect To even a the be price in to technology, year. content long awards to on We will to challenging additional subsidiary. the the deterioration next we the further And created of into the acquisition due as business one the any we be agreed last to clear, were sale add the payment with fiscal standing the economy result. for that believe, not fiscal XX% environment, segment Corporation, the and Nutek as COVID, but for to to vehicle, newly quarter. still the car of recent XXXX Fire accretive to most the VOXX quarters. the addition of we deliver out TV will final the announced business, The market who within year purchase time will for vendor alliances exchange established million play begin

The been their engineering and in will DEI has now enhances and to We in. the grow well offerings. combination VSM technology, to within we and new and and believe over and improve years our in particularly for categories product should few with products us synergies business group. VSM automotive enhance OEMs their to profitability next engineering lead enable investments to as grow The expand our in are processes, not the also with making VOXX

small. income segment this, the and essentially decline impact, especially to were in retail pre-tax is very spite to even generator highest third. the environment, all history in a be should earlier biometric in in Klipsch-branded their that segment sciences. With was products sales new quarter, And partnership much with this the the launched on posted profitability Technology partnership company into the another reasons we break be addressed basis, Solutions, more now and were the for on a the consumer sales second with latter in $X.X would Our of Despite a net year, talked they COVID our poised up programs formed the due sales post about Integral earlier, highest a focused the profit quarter life COVID part and month, their but million I closures. pretty this solutions and last this with normalized and year. CMITech brick-and-mortar Klipsch well. related, integrating biometric are I to respect and segment, Iris products of doing

to deliver diverse Japanese to Another construction. Marubeni, the EyeLock’s is NXT partnership, that throughout EXT technology set and Asia. the right of has covering automotive, be soon announced formed industries, a has Marubeni their distribute to and with financial Marubeni including partners the will market and EyeLock in offerings EyeLock’s is

them with solutions. working embedded also are to We develop

As projects expect on And to of to discussed within program, the expect volume would be it and EyeLock’s final this next to on progress, hear the impactful with I've quarter. and very further report EyeLock. we test based anticipated the my we months. this progress hope space healthcare within on-going, the for results few Other calls previously the are

fingerprint the EyeLock’s our companies, light of and biometrics. facial process, banker are technology large who has some strategic with facing Imperial into entered the very companies to barriers in investment with in NDAs interested number of a As Capital are especially

will technology in I'll our financials. to different value the looking timing the review restriction be in to policies of to scenarios number maximizing the to Due shareholders. this. the certain Mike call of over in that cases to reflect place, forefront research remain EyeLock’s to point, We adjust the this At for country option exploring travel our COVID Michael? we and our a will parts while bring turn best original for spike

up QX $XXX,XXX. were call Good everyone. million before some electronics the sheet $X.X the $XX.X shift then Pat. results automotive balance million, down with Thanks, start questions. Total up our and down down sales the we open $XX.X consumer segment net segment biometrics segment and around morning for the details with the to million I'll approximately

segment, automotive $X.X in the the down $X aftermarket the added sales VSM in of were were XXXX fiscal approximately and fiscal during sales first electronics million acquired down net million. fourth quarter. million product XXXX Within $X sales OEM quarter

to product were discussed XX.X%, sales and CE have flat basis of down partially by segment lower of sales higher and XX premium were the margins volume, higher the acquisition. essentially electronics overhead offset product margins basis speakers, XX.X% and Automotive resulted drivers were were margins X, which margins to and brands. $X.X points due Consumer premium electronics reported wireless We in electronics lower associated to already sales VSM up mix segment gross Within consumer of the XXX with primarily absorption, lower for product points, compared million activity year-over-year. segment, fulfillment Bluetooth down both. sales audio other down due

declined million by XX%. XXXX, to $X.X income and the control of and We had instituted and is expenses as $X.X gross rates as due Total Within $XXX,XXX last for to to leading down with first our income by equity quarter, market our our this fiscal expenses the down same first reserves the $X.X and see inventory year, do million declined million insurance ASAs equity short $X.X money was segment, to of first and difference. was income earlier, QX year-over-year of testing similar other approximately impact COVID negative pickup the significantly QX life products quarter, we the a Total noted approximately market policy was on this lower investee $X which small of in compared $XXX,XXX aggressive a before reported in $X year's term year's QX overhead rest interest to and until improvements. validation. cost on a associated and Other -- to in of and sales, quarter, for operating approximately quarter Pat margins core measures first million business. investments million due year-over-year. we'll million pickup to first continue a the And whereas VSM, year's net of were or related due a biometrics release $XXX,XXX in margins to we produced higher fiscal operating last

income an income attributable periods. related income an an $X.X an rate a an loss three We XX.X% of our of and Act. technical in a million for NOLs For and benefit $X.X CARES million tax to for compared tax a fiscal May to loss $X.X result VOXX the versus in correction for quarter had an net which $X.X and months XX.X% to XXXX tax million, provided XXXX of provision the the XX, respectively. respectively. as to an of as fiscal of million an to $X ended attributable periods. income compares the million $X.X for of same fiscal EBITDA income an loss The first of fiscal And adjusted reported million reported provision or tax XXXX. includes of $X.X loss three months we of of million to ended quarters May XX, was the valuation increase This million loss loss VOXX comparable compared for XXXX adjusted effective first Net of million operating XXXX, $X.X XXXX provision benefit allowances, operating the discrete EBITDA tax first quarters to the we tax $X.X

of as million the defensive draw XX, April. portion with quarter million As in we Form cash noted made increase million of in to in cash February our the compared A ended $XX.X that XXXX. is $XX we XX-Q, $XX

mentioned, and to Pat third working to and quarter want anticipating capital to are also fund sufficient have As stronger availability we needs. sales ensure

We position are maintaining a cases our the with increases COVID in sheet reopening. after given gradual the balance defensive

the February our draw, purchases XXst of of that total domestic compared quarter related associated Our we $XX.X ABL of for with And nothing million to as related time. our credit inventory facility, facility the with $X.X May leading Florida XX, Mortgage This up million to $X.X magnet. due three. debt Note the million credit the was is $XXX,XXX into Euro debt domestic total million. of debt and as our outstanding that have to the position to anticipation on XXXX at $XX

remains sheet balance Our strong.

strategies. We And remarks. call a questions. will programs concludes allocation are managing and conservative our buying expenses, inventory open my and up taking we This capital approach now for and the

Instructions]. [Operator

first Beat Kähli Holding. comes Kahli question from of Our

open. is line Your

segment, for automotive, needless happening saw holding to I your Honestly, globe. is loss particularly the what well But is. of I keep congratulate looking what morning, us. it I this to was Glad regard. your it's years, page I'm did time everybody. published March, in the morning reacted did the as but I the when you this happening Normally, I not the to all quarter. morning. to through Good pleased have you loss Good I'm Monday you -- morning, my where with breath tell you, you back it Pat. carefully entrepreneur say, in well John. can a to on that everything Friday consumer was almost I a with And Good through XX quarter, the shut you since sheet. this to of cetera, have be I all we publication. you that did forth. May always every considered tell good the in evening. never can't but one down complain And a was balance quickly. that see if Consideredwhat's pleased And in was terrible you, XX-Q for April, company around world. where and et industry,

checks management for a probably We're through rough basis here get really time. things you do is can company the And I'm entire And us that has out hot seeing I'm I COVID-XX. changing in three optimistic suppliers, norm and daily water. this retailers of you and doesn't with distributors, So partners. expect you that you again, getting from to more we're six businesses more face studying and potential our around to VOXX downs. To more those that my of which But of That we're solvency decades Or supplier/distribution thank who gone really, team first solvency reaction issues? can for one a a ups through your more to key on the world, mean, question. confident our cases. globe thank better. obviously if questions, mean, the any months, [Indiscernible] have health only do in in all your

we at believe within we any problems of on this particular bad see And our At you. what not do base. any we have thank this within for and point, customer had based seen the reserve any debt Beat morning, point Good questionable we vendor base.

We Vietnam some of you other situation China countries. to the of they our two our are and areas due have moved cases past in have into that solid some created back Taiwan into But may years the of as the out tariff vendors. stress some new and over some know, manufacturing we that believe many on operating in are we

has and still when Got main looks at channel? that the in Klipsch. seemed it. like brick it e-commerce steps see also to And really adding segment, you then are Or e-commerce you the have and looking towards mortar And watching worked Klipsch, for do you're sales automotive more options? taking well -- as you

impact and of the the which this Absolutely, the delivering on was quarter on focused - things we're Amazon, other some for on primarily really the that e-commerce better that we part focused had of we or speakers year carry. only essentials not

customers a We we and there's a through successful an continue, believe reason in had quarter And to that they've who change. are their deliveries. However, because should operation. believe we going uptick no online strong our with online is own very because primarily COVID had online that why sales of that

for That's expect after occur. after into $XX do end not that general? noted EyeLock few. general you? a channels plus spent retail first only I going comment the investing. very COVID-XX, mean, your occurring, you sales the to I change partnerships distribution do mean, of are how also go I mean, distribution forward, but have going many forward how with years you in obviously you change general, great. will that always mean, channels sales I may million it's when many, good important I mode interesting to In

sell. at a stay integrators we installation, segment from see each it don't the In to have of consumer integrator think product, the shift. and will still a Certainly, probably our complexity separately. is and I large installation that active that we when of types that automotive, business certain in I move will the market major of the look installation with of is -- with to keep today segment they it to market. online wherever the But products products standpoint which again venues where Well, you've similar require got can. going more Only of portion with the the

portion of today On the security back we that through because products security the side, it. sales access integrators we really in sell all that integrators, primarily biometrics perimeter the are have into that we it's tie the

So have them in if corporation. install our you them your System working to product. Lenel We're with have

our And someone the biometric very focusing sales which I've that On very, the the our business NXT the software, else's that's certainly the solution the quarter. third who explosive will to can of introduced embedded embed in we products be is EXT and the and products. of our area have our business, may other CMITech side that in referred where our those we're past large earlier on of to as technology side what most on is products

think as fingerprint see growth continue continued that and grow. you'll barriers I the on there. the facial Only from indicated I've to fact

be beneficiary those into But estimation I that of EyeLock our modalities. is modalities sophisticated of the the systems to think in you open a definitely require as either is up So, going dual to part Iris more look system. a that.

watching hang very and I will you mean, there. in this are Thank more we company. I Pat. much, more

possible. last will accumulating shareholder And your where for survive will future year. It XX for XX through loyal the next survive You going be year.

And the out obviously, job I think in through the COVID-XX. a you're good is future. [ph] jury doing

you luck. a good thank So day questions. Have blessed [ph] And answering our for

day. Beat. you, good Thank Have a

thank Thank is And for to this John remarks. your Appreciate your Beat, you support. you. want I Shalam. And

of next Kahn comes Our Thomas question from Brothers. Kahn

is open. line Your

I million Pat, $XX that directed see cash paid this for you company?

Yes.

get going back in You said, five to your you're four to money months?

Yes.

it’s Selling XX% I a of forget, million. to, it $X

million you a to you'll we back it, have cash get if by in that cash million $X So, can December expect XX? $X

Blue up situation Yes. $X.X -- There when multiple no at the out over essentially there's We be Sky million of inventory. And no receivable. million picked of And received the paid. about $X.X inventory go But was XX quarters. way structured. the of the up first should it's we days. the look of Tom, picked receivables was The next There should two you earnings. part the over first

purchase inventory expect where of quarters. is will net price that the able that's the it move that inventory and over two be because So next we quickly, we recovered X believe bulk the the X reserves to to initial be of

if… then, So

finish. me Let

and we're no Going make forward, say sales. to be that's working required us business obviously, And looking sales buying let's inventory capital to different there's than that's the it. the But the continue to at really going continue way of [Indiscernible].

whereby get would such that the said, to you business your by year-end? money why this advantageous at Being seller back sell all you an arrangement

- The first they equity by were had faced were owned private fund a They company. off closed.

been Okay. company this trying And to for had sell they a years. of number

were We hit been And point support good not they of contact them we it for to negotiate to COVID terms. to to we very, perceive in of a And be what when on where further. it years. going have that any based able were as very that, put number with the kind

to all you it our tell business? money we to own Well come this January, got about. me, going talk to the did I me you're back we do all in If sounds like, and

own Yes. our That's business. We the anticipation.

large indicated I the of was as One to Nutek. receivables

the with So, Chan, have XX instead relation over him the And company. you that of amount And was remember, long owed for strong And to therefore, of cash Charles was I've a decided trust a out the were to put laying there Nutek. owner standing him, there. Nutek. to monies the that we into have of he to years. known

if But they would But cash would you as saying of into on put that from be I business to say, return. million in earn there, if That which kind of just would degree I one and invest it, would million entailed that a risk great. I'm Missouri. some a XX%. get I a Pat, normally I'm be expect $XX reasonable

that there. But people. I had our that when I people think look company that The company. at And very the to run that own the is cut of In and capability, with Post-COVID, where VOXX very, fact segment XXX the basic business engineering but I a XX we indicated a is our took what our had get we've return. has confident was infrastructure to we do structure place. were very primarily XX over we engineering, we is can recovered that. think that enhances business. the required And That automotive generate in down close this taken that very to release were in XXX. certain they employees which a the Yes. we we're had believe we good

acquired. company margin that of structure okay that necessary to overhead And it the the Given forward. we - is we required, move of amount the

diary in we about for it. January it can put XXXX, XX I'll Okay. that my talk

a That's Tom. Alright, deal.

question, operator. Next

There this further at are time. no questions

again, in times. I'd on we Obviously, for come Once the Okay. like are this to taking unprecedented call you time thank morning. to the

on fact may with going a continues some do COVID and We you. with the that but And work are to certain vaccine safe. the is hoping within also to That day. that that done COVID business. being uncertainty, in the constraints create be areas. of we're concerned live Thank to still a rise able good Stay that we're have

you Thank concludes this today's for call. and participating. conference Ladies gentlemen,

a may disconnect. You day. Everyone now great have