VOXX International (VOXX) 10 Jan 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the VOXX Fiscal 2023 Third Quarter Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host, Glenn Wiener, Investor Relations. Please go ahead.

Michelle. you, Thank welcome Conference and International's XXXX Fiscal Good to Quarter Call. Third morning, VOXX filed and updated Yesterday, release, Form our we XX-Q week, be and issued we'll posting presentation. an investor this press our at along found be than Relations our be the Documents as www.voxxintl.com send well. can I'd them in and to request section Investor of website upon happy more

Officer. open Senior Today, Executive Officer; Chief the Lavelle, President Vice and questions. we President and will we'll have prepared remarks After Chief for call Financial Michael up from Stoehr, which, Pat and

like to for except associated ended forward-looking and company the I'd The continued today's for for business, information point with and Form statements, in contained Pat? based Pat. you would to the period webcast it's constitute detailed call pleasure are to now factors Thank such information. and our available assumes your on I'd like made our XXXX. no risk historical turn on remind everyone are which currently statements the forward-looking to responsibility that over herein, to call that XX-K any to my support, statements February XX, you update

and morning, you, good Thank Glenn, everyone.

in we I this to show and last CES the just returned. attendance year. at full was I back was estimated And know, show people see an you have As XXX,XXX it had say the to week, great that with strength

for is. and year of things attendance And we a normally many of industry, close the by were As event the of the the industry the is at pre-COVID show, things numbers to fraction back hope was what for CES and of come. you good good to to year, live know, the CE getting biggest sign we a -- last it while far,

in approximately than side, case, based the than result. We XX% As and one What less for they revenue November customer of production And sales with customers we and a and year still around and Stellantis, us. of Automotive what we chips. our chain most for results, On in were and anticipating to can't will supply Automotive primarily XX% quarters. a QX responding. OEM discretionary securing less plan look Fed the last few the retailers next in projections, up roughly came part In CE in projected. on QX lines by as have most our difficulty the as have the our how and December interest lost out keep slow happened? running the segment, moves when of by impacts to the spending been slowdown aftermarket the economy, We're it rates, issues, production driven economy and we softness the recent in higher continue over due declines

pressure bottom So help which some and again, we improvements. have sales products offset Pioneer lead of growth should line to and should Onkyo more and

upwards. Our not increases, of margins year, second basis up gross margins and improve continue points basis margins, down number to sequentially the trend programs a XXX gross were but to to We've instituted just XX points quarter. expect versus to we price compared last

XX% Our down were and operating quarter third compared year's XX% over sequentially. expenses over last to

We capital have of lot business. taken our been out of costs vigilant allocation, and in we've our a

cost lower at in will the and we when looking reductions be normalizes our more business of efficiencies our But of to back economy. hit, will temporary some where see can every reduce we're we similar COVID or some and expenses operations Now our to part the and base. adding improve as see we be stability

adjusted $X $X.X an and the operating profit were million lowered So down resulting million an below of EBITDA were quarter. Margins and sales year-over-year but our overhead, trending significantly expectations. upwards we of in in

driving sales OEM with start segments, I'll were and sales the sales with down million Automotive aftermarket $XX decline. for the up Automotive. As modestly

$XX year-over-year, grew at and but between lower was models and projected I new the million held growth we next projected, several Nissan biggest estimate our and with coming than by issues progressing, of lost check Entertainment $X customers, online in over OEM at chain While million supply faced sales by shortfall with we customers. have programs are volumes quarters Ford Stellantis. and the few with the vehicle Rear-Seat

be We with awarded also program major an kits million from the remote estimated another approximately lighting programs start new drive Additionally, X for over years. new award were interior Subaru helped a year-over-year to OEM, $XX improvement.

to plan in expect award. begin this lifetime or of We on vehicles expand the more fiscal on X over to program the starting to a QX this of few with year a

As not for but we the levels the aftermarket, softness we at expected experienced. some

it categories foot category but was less security shortfall. really had the traffic to where Several were the aftermarket down we retail, at biggest due

at and portion year. hurt over a Softness retail our inventory of base had good sales last from distribution left

of ordering volume when can has also they need they it. the So as know supply get been slower they

new on the a aftermarket enough with dealers, our side, but a and simply million pretax us million segment on had Automotive QX start security QX last the versus it cars We and of car lots. business $X.X $X.X XX% in despite working profit against the of in approximately Additionally, remote aren't year. is posted lot there all,

issues growth grow growth to continues is, work this larger as even segment volume sheer as to market will Looking much customers generate capacity improves. term ahead, and there prospects we near The our ahead conditions with but through some the with expect as grow, constraints. should programs of this be OEM

which Mexico with also it more of especially have mitigate normalized volume. our production business. our improved We with higher taken doing facility, out the to have to gross worked margins, operational, leads actions, cost now of costs operations also new is and These coupled

and was million products, in soft down declined buying in sales as made which inventory Offsetting Europe. approximately decline XX% and sales excess sales increase Again, economy segment, Premium most are XX% on had Consumer approximately the for European by $X big up over based for differently levels. were softness. was domestically over impact retailers of of other As a down Premium is sales and systems This Consumer an theater $XX Audio. million the on this and home the Pioneer Onkyo were in

Prices Demand curtails high not Pioneer, and in and some are gone chain we up and but during be $XXX few growth over business we add this but up in sales, significantly which products EMEA Japan region. ramp said more can constraints the million China, of the have due this are we numbers. projected remains have is our and been chain, to traffic with globally, our working regrow for of for pre-COVID some supply North and inventory I than to in-store and the very lighter the their production with production that the to and inflation production to next also I'll year, supply times. believe serve closely most open QX, we America struggling years. ahead. before, missing suppliers other India, quarters I've had prevalent Onkyo Sharp many to partner, Retailers levels up expect only in

and Retail are when needed they patterns know purchasing slowed down. changing spending that they as and can is buying has discretionary secure inventory

didn't XX, in from SpendingPulse, by by X% according to the declined Automotive, even is Although survey account electronics recessionary to know the December X X.X% we November over for which category territory. consumer Mastercard and holiday-related spending rose

improve expect conditions market may will We the be while and volatile.

clips part bars X exciting as Xs and consumer McLaren the brands. speakers of be systems coming We to market Klipsch the audio year. Premiere products powered under and Klipsch monitors, introduced sound of McLaren. of ] Reference various and Xs branded a and have relationship series The Cinema a lot ongoing and partnership [ this will and with and our new

Pioneer and Magnat, and introduced products among Integra Elite Pioneer and and a brands, others. will be host Echo this year Onkyo, New under receivers of the Jamo

last for aids products remote and products. controls, number also the and at of We connectivity wireless hearing week introduced show reception a new speakers,

We're for help is we're to All facing. their to news and will the now. is you the we right wireless the to For all time where simultaneously. see challenges these hoping United we're be and tough offset U.S. Retail Canada happening. shipping business, will have what's the the speakers under brand, Costco on turn first in enjoying do both ever programs States AR Canada

the of very the recovery closely remain of said, globally. The enhance taking will share. status based to past that could With managing as we're recessionary continue a with fears environments the and if margins to And returns a global and to worse position year, bottom and a quo our environment and and when half planning get inventory in market drive conservative cost. has strong changed also We're We're on over market we'll in economic approach in increase and retail be our working U.S. second conditions XXXX. we're hopeful improve, line lower partners. the

at of to top number There segment, new a under with while EyeLock and is were sales of believe our line lot see we increases we Biometrics modestly, bottom right various begin down we'll a have activity performance. improving now, and customers development. programs line Lastly,

Within deploy be to our quarter. solution by locked the of our its services, first development banking-as-a-service and program last quarter call, a I completed end financial I on on last conference Axiom discussed in as fiscal Bank and should new the 'XX

on costs are round roll bill testing we expect we Testing We results monthly to We're ]. the big account February. begin believe delivered begin Integral end we its access health We'll program clearer thereafter. care, last cover development our the solution and work by impact and milestones. week certain been of about. develop care payments with for and will we'll and reaching sense of development be of officially to myris XXrd, have health continuing the be based will of January logical [ the Within a with the pharma to NRE big receiving EyeLock's out what we've talking product also

lot will a solutions interest be OEMs was discussing there we at quarters. larger X Automotive, inbound and our last of in Within the coming week, with of CES

process proof for a developed rental being We of program the with of this mirrors have one we Mall. agencies, in car Miami concept large and the Auto have the one

respect the quarter, several control at gaming, for garages with number dealership and other in brand sectors: fiscal their across are will and believe plants EyeLock projects definitely location country. we'll in completed and XX X we that nuclear program, to Momentum lead and system XXXX a for control building installed its business installation global which access system security, the industrial their to and at out deploy progressing strong to the be we more reach. development for conversations lots, government, This we've and solutions several large and and With other is with plants other EyeLock example, U.S. to access underway the in enterprises past shortly. parking have of it's power rolling throughout names

is growing. pipeline Our

to segment with profitability. significantly. solutions, our see care launch the lowered growth And drive expenses should of health banking we have this strong We and and

comments my the we last continue closing, tough the to challenges into the a will to take and second improve profitable that half have remained business. a half In with the persist but from second half quarter of first steps year on

We quarter OEM to based and expect and to a tough profitable, comparables 'XX improved fourth we and performance due expect on in contributions. fiscal fiscal and 'XX Onkyo Pioneer be but

lot confident that we in We to of of segments. have need happening good and weather at the will. just all box am things We storm, a our I

the With turn that, for we'll up and call over then questions. to open Mike, I'll Michael? it

morning, everyone. Thanks, Pat. Good

provided sheet. quarter, thereafter. my my remarks the Pat and and drivers, the focus address of QX third a As we balance remarks the to P&L can I'll thorough year-to-date performance review keep any questions I'll on

$XX.X customers Automotive our with decline OEM million Within in and issues higher Pat million $XX.X $XX grew And sales face down We by Envision Consumer by had and as growth. at chain in Biometrics production $XXX,XXX. sales declined $XXX,XXX. a curtailed at Automotive, down supply cases, VSM. million, mentioned, shutdowns some sales sales product and approximately both modest resulting Code and our Net

and operational Pat in $XX.X security products fully for the of Aftermarket down were of shortly. and decline, Mexico $XX.X process respectively. production as sales And to accounting million radio satellite we're million million transitioning and with mentioned, be will $X.X

spread across various With categories offsets. some the and remainder

costs. the wireless and inventory Audio of by declined $XX.X down product which are sales Premium drove due We Consumer, borrowing in has year-over-year and premium traffic lower been home to decline Within million. and concerns retail as economic speakers taking theater sales retailers had higher less

Pioneer-related Onkyo are product sales of Premium in production and were anticipate sales the Audio comparable $X.X Premium has Audio distribution but expanded decline Pioneer-related million. third up which pre-pandemic levels, periods, globally. ramps we around the Onkyo for million as offset sales increases do now European product $X.X and quarter and

domestically Additionally, sales with primarily many international essentially and other CE environment down spread million, product really it flat. sales were out $X.X categories retail was to due across

$XXX,XXX, volume under of new development. but projects underway down were anticipated to now given the Biometric grow sales quarters future in and the products

down down basis higher instituted to XX place points container cost of put issues, and points, have XX% chain with increases several down. of XX tariffs, materials and various to year, warehousing Automotive Throughout up in of basis price offset the margins Consumer Biometrics shipping, we costs. rounds basis points, the were Gross costs programs supply address and have higher the XXX and

greater see quarter positive improvement production the and and believe impact as the increased we categories aftermarket room have on to volume a began third We especially Automotive OEM in side certain in normalizes. for

up half QX of on certain Mexico, basis in XXX fully year, production up XXX where the shortly. To we put is up OEM XXX basis We Consumer over margins operational even fiscal perspective, to will with challenges Automotive also expected this were our see to points, and points with relocated improvement the based faced. basis gross first better in points facility the be

$X.X salary $X.X related approximately our in by which by and of expenses operating SG&A $XXX,XXX expenses, -- Mexico reported little million, expense tangible down $XX.X a and had bonus over a selling for by Within by declined expenses, of for within declined OEM With facility. periods $X expenses G&A we $XXX,XXX, down support and decline declined approximately engineering which periods. and commission comparable restructuring-related lower and legal salary fees $X.X We of the and professional expenses. new $XXX,XXX million expense declined selling expense incurred we $X.X million, million to the million comparable million, with

development prior segments. declined of expenses Bad other year declined expenses $XXX,XXX reserve took by the quarter Biometrics Engineering to also technical in fiscal as in had support to $X.X reductions segment, last million million, the in more lower headcount releases we the approximately year. which $X.X compared and debt and by fourth place with expenses related

$XXX,XXX. Lastly, direct labor by approximately expense declined

from instituted our last cost quarter, remarks you As containment and we know, programs. reduction stringent expense

and reflected QX in environment materialize market many of more QX. are results, these changes the to Given with in our

to As million, due for other award, of which by the $XX.X the increased $XX.X variance. Seaguard principally year-over-year for accounted arbitration income, was million this which

currency XX-XX by and income our Additionally, other which is by charges equity for Equity joint increased investee, strengthening Xrd declined due by to in of quarter to and with related compared and the fiscal foreign this in interest period exchange $XXX,XXX. primarily net and to $XXX,XXX $XXX,XXX venture bank improved is ASA net net foreign yen. comparable currency the gains principally XXXX dollar versus losses the

the of We of resulted $X.X attributable million to This of recorded to an inclusive fiscal compared loss VOXX share $XXX,XXX income quarter. tax $X.XX of benefit of to or $XX.X or loss a accrual. in $X per Xrd net of attributable a income compared to $X.XX million per a VOXX in benefit share Seaguard XXXX net million

quarter. adjusted EBITDA and XXXX million million comparable EBITDA an $XX.X $X $X.X EBITDA to loss compared was of EBITDA fiscal million million Xrd and the in Lastly, adjusted was an as $XX.X of

to sheet. in and And more million to debt XX, debt equivalents balance XX, primarily as decline compared domestic million. million to February as normalized related on bring $XX our and to the begin increase cash million. XXXX, was cash XXXX, X to The credit in we'll $X.X outstanding which of we to and $XX.X total we quarter November comparing as inventory was million see Moving had quarter to $XX.X the $XX.X Total used inventory is X, on of balance to facility, sheet this fund levels. the compared

U.S. decline the loan and a to as a in dollar the variances result strengthening yen. to $XXX,XXX payable of our additional versus payment mortgage our The a in Florida shareholder reduction related $XXX,XXX Sharp

to our believe global manage sheet going balance working for weak preparing and We're have forward. to business improve. economy a We our and capital right expect steps we the improve our taken stabilize to continue and

Operator, I'm ready to open for questions.

[Operator Instructions].

from comes D.A. with the first Isabella question of Davidson. Sun Our line

This is question. Davidson. one have I one Isabella from and Sun D.A. question follow-up

declining your you year? of fiscal about from year? on And remainder give a thoughts how this investors So results costs for of standpoint, next the think should and initial your cost margin the on impact can container

Yes.

cost to obviously see the the costs our And container to going As continuing merchandise to it we in. we landed lower attract that's container we lower as expect bring costs. drop, costs to see of due

revenue Some that lowering maximizing balance will line well. we we to top at, is close what we remain We're But are we of in as make prices some levels. also of have them pre-pandemic product that that getting sure and do cost. our to reduction so that the competitive are offer can

So be it's prices. will balance. consumer it competitive offering the going increase to margins although to same us We allow more the do a at time, that expect

as my the were VOXX is at follow-up CRC since your participants a thoughts you CES So with the What question what implications and VOXX? as for were beginning. longtime industry for the on

mood this As opened next we I morning, be the a the them, number I that into attendees possibly of and with were thought our showing estimation, the further, the year. attended, upbeat. the quite situation the generated We OEM month say in but -- a them the at we and some I well when our have expectations Everybody coming had interest we face a speaking or slowing show indicated was, were there slowing customers of we'll CTA, in, new exceeded of recognizes with it the I with positive all that Fed was amount good X. were would the economy show, and of the over things

proof a some we device. a that demonstrations, with that one stroke of a working proof especially concepts with on concept. major that introduced, some products and of OEM is on performing We're heat newer be pediatric will We of our

I that up, the mood into some business solid we was things was overall, that very the the a attendance are But at and So show that hopefully were all turn good and go-forward basis. the meetings on develop thought, these positive. had very, will the

with next comes the from Our question of Bruce Olephant line Oppenheimer.

salespeople checks find. I to product abundance. product could and I a the when it, my was the products, channel a, I should well. when and comment proceeded just I be they selling buy, in to I the discontinued. And whatever then buy wasn't November, starting product Klipsch about Costco, there, in if to and checks even because noticed there, some go wanted weeks was was asked that not saw to the go doing than that, the channel then at I there Costco, I And I product to And going was I going made later,

So I stage was the into it really, product? holiday, Costco just Klipsch what's did the we curious to going that And at product know have available? with seemed the situation the regarding --

We and promotions that maintain shelf it's year products like for them, we way receivers not They new offer for the different this We long. programs valued thought product we present they products and that. year, And a things we the the like program. had do the met on the Costco Onkyo customer. we offered a that offered as the requirements because work with keep same

that. product the offer only Audio we manufacturers there the a product is and of is so programs move that next specialty selling some those things we'll are offerings that or of not strong that it's Some also other our through therefore, some that remains have we expect some retailers into -- of like products not programs with of and Costco Premium out, the as But but product replace account, we those good, is they not year. account, and the newer

the deliver, U.S. starting time and where outdoor the have program got coming to probably and enjoying mentioned, a I it's first So Canadian spring expect with we're very we speakers we program we've to business, a launch. as positive February start really very, another but it's in is that -- this that through, big both

So our strong. relationship with Costco continues to be

from comes the question Apollo. Chen with of next Matthew Our line

general and the please in is, on I'm joint then terms with actually then concerning could of you significance the question Premium Audio the perhaps the overall company? overall significance the percentage significance Audio to company of relative a business private the comment the general the the the Sharp. of Premium to company investor. question I the to joint and a venture specific of The have venture a of business business

with Japanese relationship that was with our the and beyond that relationship the and before manufactures When of part where worked our Audio we of at and we company acquisition company, remains look them is product. PAC, own manufacturer sells Company, became the were the Sharp the And Sharp, in worldwide. the for Sharp, we Sharp develops products take We the that partners is and primary very markets the to we acquisition over. Onkyo our Onkyo jointly product Premium closely

XX% as They own supplier of key They are a reported, Japanese operation. the we to approximately us.

in were announced As we of have. last that is But Premium our largest some year. obviously, far Audio as loudspeakers. market the maintain do down share segment I've consumer the we from in And segment #X premium sales

We just is the in years. really what's have This happening economy. few a result of

share Onkyo We have our increasing speaker under maintain receivers market we in but to business, are in that market Pioneer. share expect and #X also we

So important VOXX within the segment operation. an entire

specific the of for growth last X you Because Mike. think, question, Note [ might payments ] that And be used the for projections. golden of the Okay. made in stated year beyond is expected model XX-Q, I

then the growth rate the discount for in last what's wondering model, So assumed year projections? the and what's I'm growth And model. of the rates growth

that. Mike, do you have

You have Mike. muted

actually when Mike It Michelle. is he himself went disconnected like to on himself. This unmute looks

right. All

question. with what, I'll You have do we'll to is we'll know Mike what that answer get the to you contact. back

Okay.

Yes. good. Sounds

Thank conference to questions time, further remarks. you, and to back like no at and over the for I'm Pat further I'd showing this turn any

Okay.

can Fed start of and a want the of of new that awards to the on for expansion I automotive us morning, move joining see the again, we see your what economy year based number can this in the you we I have do landing support this a we And will a achieve adjust, in into and lot economy. said, thank happening We year. and forward. help economy, and nimble, the thank the hopefully, Pioneer and will later a I decline we we will overall for remain OEM soft day. As may the Onkyo offset VOXX. great general worldwide Have you will that of

concludes conference Thank participating. call. today's This for you

You day. great disconnect. now Everyone, may have a

you. Thank