VOXX International (VOXX) 11 Jul 232024 Q1 Earnings call transcript

Good day, and thank you for standing by. And welcome to the First 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. [Operator Instructions] Please be advised that today's conference is being recorded.

to host like Glenn today's now Wiener. would introduce for your conference, I go Please ahead.

good And the we morning, International's and can at press you, Thank everyone. www.voxxintl.com. of documents section first XX-Q issued which conference of release, Form website both fiscal found welcome quarter call. Relations our Yesterday, in filed be and a Investor XXXX VOXX to our

Officer. Officer, today will and be and Executive Michael management Chief President Stoehr, from Speaking Chief Lavelle, Financial Vice Senior Pat

Kahli, with of during also and prepared Beat today President, available Our be remarks, is the following us all the will portion Q&A call.

reminder, and annual July XXth, meeting shareholders visiting www.virtualshareholdermeeting.com/voxxXXXX. can a at a we'll XXXX This week shareholders. held fiscal be attend will by our As on of virtual next Eastern be AM Thursday, meeting, hosting XX:XX

update I'd to detailed The in statements, As risk the our call on are which responsibility made remind statements are currently to you and business, herein, factors except Form based associated no would XX-K forward-looking everyone today's the XX/XX/XXXX. point to contained information for constitute company any period like on our for information. for to today, historical assumes statements and like with I'd that webcast forward-looking that available ended such

it's for your Pat. continued pleasure Thank to you turn support, my call now over and the to

have obstacle our materializing we remains a Thank in while economy results. quarter first is near-term. throughout you, Glenn. impact And globally. our good retail And morning, everyone. The of The the the is number market remains reflected primary good segments, tough challenging environment a and things

XX.X%. the X% the with Automotive Consumer roughly down net QX down sales segment approximately down were and XX% segment

speaking continued interest interest changing and by issues Our card could who’s at business high OEM you. Higher higher be Thank everyone please? production patterns, continues rates debt mute credit to -- our customers. rates, all-time consumer impacted not

not you And is alone. can I tell VOXX

same the are. facing issues are we peers Our

our term. for this We've over XX expanding moving with share capital. about with and time are retailers Buy, many years in and We and outlooks forward been expenses it's XXXX, while capitalizing we're reason same well term, and in for Target, not near other opportunistically. some for and growth Walmart at the for bodes Best steadfast maintaining areas a plans long and reporting our managing losing weaker market remain around But we

OEM volumes As and higher with for segment, Nissan systems. up our our entertainment by Automotive rear-seat was XX%, our Ford, over Stellantis driven for business

not chip We have be seen easing, but some appear and cautious. issues in increases in cases but to production, customer being still all we're

contract Mexico, consistent to current we for production systems by mitigate in shifts of XXXX mostly working complete with Volume we're quarter. RSE end to and and fiscal Ford remains develop with pretty will on the based continuing and pricing tight year vehicles. be are the are second this to Margins model which our began XXXX

Volume with have Stellantis somewhat with picked me. Nissan -- and up Stellantis. Excuse

Someone Wagoneer And stop. Please for the Cherokee now we're supplying system is and typing. the specifically. EVOLVE the

Let on. me hold

if typing, Thank is stop. you Someone please you. can

the system for supplying are Wagoneer, and We Cherokee the now the the EVOLVE Pacifica.

as issues OEM been growth was various plants some some slowing reasons. related higher customer in the for category production down Curtailing RSE have

hand, other which sign improving, supply chip the On the for has is industry. a good been

due business our number growth reasons. OEM out, for to a poised of Looking remains

consistent First, and is OEM production more the becoming should increase.

in demand with product of place number high. XXXX. programs the OEM coming multi-year in fiscal lines several have very large Second, vehicles a our for we third, new of And remains online across contracts long-term

loosen the last year, a are they bit want issues customers inventory things to don't as environment. watch to the working The move other overall seasons. fall they from closely we lack through of positions to year. repeat continuing automotive retail than cars the prior be I we and to much to and our continues Dealers due their change as levels since into been had quarter, the hasn't and expect challenged reported distributors There a aftermarket winter last aftermarket inventory but

sales and both in new in As and sales down almost Consumer Premium were as More expanded sales we introduced as over were power very Audio, in Germany all US for up we the the category fiscal XX.X% segment, our the as roughly than is was Canada Costco doing up other XX% balcony captured program. and our accessory wireless product sales doubled and CE product was well. XX%. Schwaiger sales growth half were of speaker ‘XX nearly in

potentially to and drive We programs help growth offset from expect economic new year. these this softness sales two

the category when has in sales COVID year not hard it's saw first following We retailers. and the Premium economy been making a home. Audio home over people and Premium were hit purchases and at Audio to hit and uptick just for staying due as their big

off last income time this opposite we're it being discretionary today spent environment restaurants Now global at The services. as year. the worse was is seeing and travel, than is other on

On over higher the other the help significantly scarcity added and margins and year, longer times, has shipping to supply led has hand, which past storage product dramatically, improved improve. the lead should chain, cost, which

of some quarter, innovation down in across at new categories, our economic months, the where past premium global up could sales the were brands several continuing of pressures, past the line and fact, offset lines. the in and spent rather to the for opportunities while year excel better existing our geographies. As We audio part looking drive

is leading which innovations and new are Premiere extremely share. Reference doing Klipsch our powered well our increased subwoofers, market to of One

Another category coming the right our marking new in and with into XL is slated products Gig hottest CE months. XXL speakers, party now Gig our entrance in the

City well also We strong presence our received will our the and Bluetooth category bode Music we've this be speaker expand in portable orders new Klipsch line advanced that launching category. will which for

though developed Onkyo. new second tandem a The market lastly, our in product we to year. new Pioneer the of related ever in recently system, category a [indiscernible], Klipsch the as in Klipsch the pressures has will sound pressured should offset the And help first license. Pioneer will expecting where and connected a through the Onkyo of soundbar distribution This expand new we're expanded China we the continue launching products late be to half by coming will products, year, is be and audio especially

are we also drive drivers believe will sales Partnerships are years few there a in help new that the growth and ahead.

EV Tungsten away. a Our will the Tungsten Klipsch levels road on and speaker state-of-the-art establishments, in Premiere flagship two you blow brand is with ever speakers on cinemas, Klipsch be audio will the Dodge XX homes, fact on water Ram the the Reference with and Ram REV that trim commercial in will be soon system the Ram XXXX truck, first as

a supplying boats. speakers had years, for with we've in partnership MasterCraft And MasterCraft Klipsch

Hard Soon, Margaritaville, Klipsch boats further. PGA continue. day yachts, others will and will expanding and be integrated into luxury relationship programs Crest with this Other Pontoon Rock, Aviara

market ago, Everyone years fast premium the experienced equally it, slowdown market be downturn to the an continue few A continued challenged saw audio unusually in the and the due this since. volume to purchases high stay-at-home will economy. of and

year. will Consumer market conditions well. And products segment our help results when New improve, to begin this as will

million compared several in throughout the of the but throughout covered calls. timing moved continue Lastly, year some our ‘XX. to healthcare programs were for Biometrics growth budget the $X light to and year slowly segment. forward in Sales QX with in projects as line due were drive I've fiscal but XXXX, fiscal last quarter, We're with will of moving

by and their by incorporated solution. be customer authentication next-generation Our dispensing was accepted testing medication solution our validated to third-party into

other across We're quarter expand three plans customer final our design third discussions start underway. any implementation to expected changes working the fiscal technology on and are in product through production with ‘XX. This lines

logical devices personnel companies We are also which manufacturing into authentication the working our to several with authorize execution used are selling pharmaceutical systems. their proof

locations. a car at a This and will is agency. recall, of you QX rental in Dulles year, As for program Airport nationwide we Reagan in roll if out may testing many developed in and program successful, last additional proof-of-concept

continues Our we business which well the and nuclear XX throughout deploy operators in to power with physical bring EyeLock nuclear secure US to with should total access, several our working the to domestically. plants technology facilities US are as

of also financial to an to space, that throughout token have our the Iris as service access with installed to FXT complete years Within the we largest we development all discussing banking the with work customer, systems their newest Axiom a continue update and they solution biometric physical to system. EyeLock are Bank our the financial for

of In closing, the global we economy shifting anticipate uncertainty the fiscal the and consumer continued to impact of ‘XX will difficult be due preferences.

year. We this quarter are recession expect markets economists expecting more of or clearly pressed. action first Many Therefore, that to hard is in remain next fourth be we'll quarter needed. in

and We half making and reality. second overhead infrastructure began of the adjustments we our given in adjusting to expenditures, meet last be the will adjusting to necessary year outlook,

automotive to Mexico improve completing are We move all OEM overall margins. the -- to

supporting fiscal ‘XX expected operating are workforce realigning adjusting ensure and volumes our on we're effectively to based We sales and customers.

and looking G&A, rationalization programs and all at external, both implementing and We're ROI. order expenses we brand internal product managing better to a actively get in are

anticipate are we mitigated some of things for. positives and it softness, Although we by seeing be the are should we near-term planning the

supply in OEM OEM stabilize margins. chain should improve help production, started should the customers beyond. example, availability improvements and next our programs As Chip new help year

this We audio set year. to have launch products new premium

speakers delivering Klipsch business. We new audio growing the party begun of entering the our fastest have segment

expanding Onkyo, geographically with be audio Premium discussed Integra. We'll expanding. I partnerships and are Pioneer

growth we number and expanded business of projects solar growing a has been should product drive segment the biometric of and profitability. lead the to with Our introduction which accessory our And new distribution. have

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

XX/XX/XXXX million to million $XX.X declined million, morning, Good first with the Automotive Pat. $X.X down our ending down XX.X%, of Consumer respectively. periods and by XX/XX/XXXX, Thanks, flat. sales all everyone. Biometrics million, net With results, Total quarter $XX.X $XXX.X comparisons or respect over and

were other to Within move $X.X drivers were to his $X.X in margins. I'll million million. million sales Pat down remarks, so million. down the $XX.X for Audio sales CE the aftermarket sales spoke on were and OEM segments Automotive, and Within sales $X.X Consumer, were Premium up up

XXX basis. points gross Consumer down margin and Biometrics periods was XX.X% with points was first down profit on points, basis basis XXX Gross XXX quarter a down for the basis Automotive immaterial of comparable

Audio impacted systems, Automotive Consumer Premium down to and of traditionally addressing. which of aftermarket segment we're margins entertainment margins products. carry well programs, lower rear-seat primarily segment were of margins current OEM sales our remote lower as lower sales due by year-over-year, security and on higher product which as were margins adversely some

fiscal million the through year operating expenses. should million as improvement margins card commissions, a credit for our $X coupled Total $X.X due see with chain, Selling supply inventory, in through improvements comparable and declined million, were cycling start salaries periods. expenses X.X% the by $XX lower expenses increase. we to or we gross Moving and the

$XXX,XXX, comparable periods. the by for expenses Our approximately professional G&A expenses with higher and travel increased fees

to Mexico, approximately the in as will transition roughly We technical And also some end associated the this our support Pat increase expenses production noted, had which by with complete declined $XXX,XXX of and related expenses, OEM mostly by of engineering of be quarter. $XXX,XXX. our restructuring

declined $XXX,XXX the also in costs were year incurred only period. as these costs Acquisition by prior

As to a operating agreements JV loss of signed relate million Onkyo with $X.X XXXX. of reminder, loss compared Sharp. the asset We the reported in operating $XX.X of fiscal our an million the and purchase to costs with QX

last of ‘XX in $XXX,XXX, investee, essentially expenses of as $X.X with flat. in venture expense is other we which year. increased by QX and bank fiscal borrowings other of to joint Total compared outstanding facility total was equity $X.X fifty-fifty $X.X were Within QX to fiscal this, million of interest ‘XX. million, million, charges Equity higher Electronics compared income ASA our had our

when foreign of an million improved of million, Seaguard the primarily a fiscal EBITDA to for reported arbitration And due we related to approximately arbitration positive in EBITDA expense periods. reported fiscal and the $X $XXX,XXX $X.X $X.X year award adjusted of loss currency. to both net loss of million QX an recorded interim of by loss in million, compared Other the We changes And XXXX. ‘XX $X.X loss an million. $X.X a compared we to comparing of

sheet. As of on moving May -- to the balance XX

end year XXst, of $X.X we $X.X had compared February As cash equivalents as of to cash our as fiscal of million on million ‘XX XXth. and May

and decreased compared lower quarter programs increased to receivable accounts sales. our the power to new And XXXX products we position to brought solar speaker in due product for due Germany. new in we Our our fiscal fourth launched the inventory wireless

XXXX purchases $XX fiscal fiscal lower approximately $XXX are as at will period. end million balances million unconditional our to in of to continue We the approximately QX, compared comparable ‘XX inventory

our as Euro a in offset not million $XX.X by credit was $X.X on to at outstanding stood debt a reduction. total which million, debt Our $X.X to due ABL at Germany, a million $X.X This the outstanding $XX.X principally facility, was on million compared year-end. for amount our million present domestic reduction VOXX

May issuance amount part the availability of XX. mortgage owed The to of million joint payable $XXX,XXX, compared with as Sharp as approximately long-term was of committed as $XX.X debt venture. the available debt, with declined $XX.X $XXX did as XXst with to company a XX/XX/XXXX as million, the on of Total Our loan of secured as asset-based net cost, by shareholder availability senior $XX.X Florida up February has of million. facility to of million

we Our would in conditions matter to a this Florida We or as availability amortization communicated previously occur arbitration. into anticipate it. and the real are estate normal on Seaguard ruling higher under preparing on court the we account formula by be before as Seaguard the and for Xrd properties takes the August of

questions. call the open to ready now we're for Operator,

oops, going to Thomas. Thomas from moment, And please. Davidson. from Thomas -- our D.A. And Instructions] -- is from And come thank you. Forte pardon question first me, one our [Operator

is open. now line Your

Yes. Hi, morning. good

So of I questions, a couple had Pat.

put you longer-term current challenging environment macroeconomic can perspectives. the in So

can backwards, as compare that have period. today going prior there's recession, the pretty one I great recession recognize a such but what significant you a of So starting of seeing the as you're recent kind a example recessions recessionary -- with point? you most is

the home. the Well, in rather sales see first things. impact And consumer that more now we're did a experiential major seeing doing right by that All -- strong now right. big when thing They'd shift is preferences we is was having be everybody in up the we're run not the

home bit a our some something little not that system products of you speaker different. years. or two buy A theater are a every or it's system So bigger

So when there as was a we everybody forward pull forward, a buy say, home. was

So we're expecting probably another year.

new it higher then more to soundbar recession some end we're is first it but pivot. The as offset by would speakers far with. of can then coming for new and system, would -- And a the be that take party business. The be systems, things through the off the costly As [indiscernible] us. out fast-growing roll new the

in to dominate expect We that space.

that in year balance areas. weakness as into So the But next out we of that offset of well. think the some stretches the would other and year can this sometime through I

supply can challenge is that also in It Thank very -- current can and issues you. for are And front, to understand part -- sounds like it's today most Okay. touched but if the That mirror remarks, helpful. on the the or on you then you was the in is rearview situation? supply automotive this it I'm prepared you trying the the the else? chain Is challenge not the what is today chain. it the macro explain something

still that of bit needed. on little the chips supply a chain there's Well, were issues

are functions do, and to use vehicles And rear-seat critical one. other That's they sometimes do more are say, let's therefore used chips the the in vehicle. chips the need to things taken that critical to other of

and things is production forecasts and is customers thing changing other that. of The like with of buildup some our there that's a inventory

strong Sales produce. may they not as be as

coming and seeing impacted new buying the being by of consumer some cars. shock in are sticker the We

what is they that that as at advised time car think over that not through. we to we're time, that of the on the demand. on sell vehicles. think it. in to prices combination interest manufacturers rate will of meet change struggling are of seeing of get cuts a lower either of think I that adjust time they But the or are vehicles seeing I all I And reductions they're the building, some same And some So time the based production with

you consumer for buy set, consumers products that of we forward Okay. had agree where proxies? historical normally original did, if rate pull a stages a And industry, and a answer, lot you the going and the Is I on? the electronics just typical to it Do pandemic, bought your of with consumer of early in electronics. the the have you're follower we gauging as that refresh consumers next then back long-time when

Yeah. we'll often, the start started why normal somewhat when we to into that's that again. patterns buying buying XXXX, start I I to at see XXXX year impact the that COVID XXXX. we as move look mean, improve probably see saying, had And okay. it all the buy true XXXX, equipment in to you'll and we'll But was this on I'm patterns, it, like see you audiophiles said, that

talk last pricing? and chain then you two improved, can And This in the costs the as improvement repeat all thanks strategy promotional about question Okay. some for my taking your questions. of from maybe is a last But supply on I have potentially reinvesting last quarters. quarter, think the

in we the that us is bring thing to same it, on excess the new some days, it, would holiday that of inventory. based had the that, of costs depending water. normally high preventing of not and to negotiated Well, lower product the we supply -- on height days is We in when cost preventing as freight seeing at excess coming, means -- on impacting all is XX problem, getting product. chain prices as get it protect which lot experiencing, storage and in is inventory to for better things the a from was were what the order XX and And of be pricing were the Yeah. cases, some us that where season like of

-- be everything that that we'll probably see at rates inventory another expect lower at in negotiated. So coming being in of we've in moved better freight we cases, some pricing quarter now would out. coming And and

space, was size crazy the premium the equipment, within the throughout that freight balance to to month profitability estimate it. especially because the component month historical back on get of levels and start I improvement So of we the then would an of the over of will year see

much come then will pricing our so pre-pandemic in see pricing pricing, competition. cost, to that on that And to see move adjustment want should competitive we to lower therefore, now we down. with to pretty based retail inventory nature pricing that a and And we see adjustments levels we're can back you'll maintain move you out on

appreciate for Thanks Great. I my it. taking Pat. questions,

Tom. welcome, very You're

for thank now Pat And you. would call over I And one the showing questions. And back remarks. am turn I Lavelle like to to moment. further no closing

a Thank to Very and further in your very I'd there interest the like good right. call on wish day. VOXX, for you questions, today no good. All If you are thank coming you. I

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

You disconnect. may now