VOXX International Corporation Reports Fiscal 2014 Second Quarter Results

  VOXX International Corporation Reports Fiscal 2014 Second Quarter Results

PR Newswire

HAUPPAUGE, N.Y., Oct. 9, 2013

HAUPPAUGE, N.Y., Oct. 9, 2013 /PRNewswire/ --

2Q14 Highlights:

  oNet income increases $1.1 million, driven by higher gross margins and
    non-recurring net gains.
  oCompany reports earnings per diluted share of $0.20 vs. $0.16 and EBITDA
    of $13.4 million vs. $13.1 million in the comparable fiscal quarters.
  oManagement reiterates sales, margins and EBITDA guidance; points to strong
    second half of the year driven by heavy retail load-ins and continued
    strength in its mobile OEM segment.

VOXX International Corporation (NASDAQ: VOXX), today announced financial
results for its Fiscal 2014 second quarter and six months ended August 31,
2013.

Pat Lavelle, VOXX International's President and CEO stated, "Our results
through the first half of the year are tracking in line with our plan and we
are anticipating a strong second half based on several new product launches
across all three of our business segments. Our Automotive OEM business
continues to grow globally and we're positioned well over the coming years,
especially with some of our newer technologies such as our smart phone app
remote starts, rear-seat entertainment systems, digital TV tuners, 4G and
smart antennas, and the new multi-tuner packs and eHub mobile servers that are
in development. In Premium Audio, soundbars, sound bases and music systems
should fuel growth in the 2^nd half of the year as should some of our newer
Consumer Accessories products, such as our Acoustic Research Bluetooth
wireless speakers, new line of our RCA charging products and our new
headphones under RCA and 808. While sales are off slightly through the first
half of the year, our margins continue to move upwards and we're on track to
meet the financial projections we previously disclosed."

Fiscal Second Quarter

Net sales for the Fiscal 2014 second quarter ended August 31, 2013 were $183.8
million, a decrease of 4.1% compared to net sales of $191.7 million reported
in the comparable year-ago period.

Automotive sales for the quarter ended August 31, 2013 were $99.0 million, an
increase of 0.2% over $98.8 million reported in the comparable period last
year. Automotive sales were positively impacted by higher product sales to
the Company's global OEM customers, for both smart app remote starts and
rear-seat entertainment systems. This was partially offset by lower
aftermarket fulfillment sales, primarily in satellite radio. Also negatively
impacting sales, was the anticipated decline in Venezuela as a result of
current economic and political conditions. Excluding Venezuela, Automotive
sales increased approximately 3.0% for the comparable periods.

Premium Audio sales for the Fiscal 2014 second quarter were $40.8 million, a
decrease of 8.8% as compared to $44.7 million reported in the comparable
period last year. The decline in this segment was primarily related to
declines in our European sales, as our domestic business was up for the
comparable periods. Also partially impacting sales was the phasing out of
certain products to make way for new product introductions, offset by sales of
new soundbar, Bluetooth and cinema speaker products.

Consumer Accessories sales were $43.5 million for the quarter ended August 31,
2013, a decrease of approximately 9.1% as compared to $47.9 million reported
in the comparable period last year. This decline was primarily related to
lower international sales, the transition from analog to digital broadcasting
in Germany which positively impacted last fiscal year's results, and the
planned and continued exiting of select lower margin products. The declines
were partially offset by growth in some of the Company's domestic product
lines, such as Bluetooth wireless speakers and personal sound amplifiers
("PSAs").

As a percentage of sales for the Fiscal 2014 second quarter ended August 31,
2013, Automotive represented 53.8%, Premium Audio represented 22.2% and
Consumer Accessories represented 23.7%. As a percentage of sales for the
Fiscal 2013 second quarter ended August 31, 2012, Automotive represented
51.5%, Premium Audio represented 23.3% and Consumer Accessories represented
25.0%.

The gross margin for the quarter ended August 31, 2013 was 29.4%, an increase
of 90 basis points as compared to 28.5% for the same period last year. The
increase in gross margin was primarily due to higher Automotive gross margins
and improvements in the Consumer Accessories segment, partially offset by
declines in Premium Audio gross margins as a result of lower sales in the
international markets, and decreases in sales in Venezuela.

Operating expenses for the period ended August 31, 2013 were $51.9 million, an
increase of $4.0 million over $47.8 million reported in the comparable Fiscal
2013 period. This increase was due primarily to higher compensation and
payroll expenses, and an increase in research and development costs, given the
high volume of Automotive OEM programs in development. The increase was also
due to related expenses associated with the Company's ERP system upgrade and
Klipsch integration, as well as costs associated with Hirschmann, which was
included in the consolidated operations of the Company for the full six months
in Fiscal 2014 compared to five and a half months in Fiscal 2013. These
increases were partially offset by lower occupancy costs and decreases in
professional and legal fees.

The Company reported operating income of $2.2 million for the period ended
August 31, 2013 as compared to operating income of $6.8 million in the
comparable year ago period. The decline in operating income is directly
attributed to lower sales for the quarter and higher operating costs, many of
which are not expected to repeat in Fiscal 2015. Net income for the Fiscal
2014 second quarter was $4.9 million or net income per diluted share of $0.20
as compared to net income of $3.7 million and net income per diluted share of
$0.16 for the comparable period last year. Net income for the three months
ended August 31, 2013 was favorably impacted by funds the Company received as
part of a class action settlement and funds related to the Circuit City
bankruptcy.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the period ended August 31, 2013, was $13.4 million as compared to EBITDA of
$13.1 million for the comparable period in Fiscal 2013. There were
approximately $4.0 million in adjustments related to legal settlements,
Circuit City recovery, Asia warehouse relocation charge recoveries,
restructuring charges and stock-based compensation in Fiscal 2014. This
compares to $0.4 million in adjustments in the comparable Fiscal 2013 period,
which accounted for Asia warehouse relocation charges, acquisition related
costs and stock-based compensation. As a result, Adjusted EBITDA for the
period ended August 31, 2013 was $9.4 million as compared to $13.4 million for
the same period in 2013.

Mr. Lavelle continued, "We have a lot of activities that should boost sales
and increase margins, both near and long-term. We're generating cash flow and
paying down debt and assuming no acquisitions are made in the balance of this
fiscal year, we should exit Fiscal 2014 with under $100 million in debt.
We're taking steps to lower our fixed overhead moving into next year and it
remains our goal to drive organic growth, improve our margins and cash flow
and continue to deliver better bottom-line returns and increased shareholder
value."

Fiscal Six Months

Net sales for the Fiscal 2014 six month period ended August 31, 2013 were
$376.8 million, a decrease of $9.0 million or 2.3% compared to net sales of
$385.8 million reported in the comparable year-ago period.

Automotive sales for the six month period ended August 31, 2013 were $203.8
million, an increase of 2.4% over $199.2 million reported in the comparable
period last year. Automotive sales were positively impacted by higher product
sales to the Company's global OEM customers as a result of new programs or new
launches, with Ford, Nissan, Bentley, Hyundai and Kia, among others. Sales
were also positively impacted by owning Hirschmann for the full six month
period in Fiscal 2014 as compared to five and a half months of the prior year
period. These increases were partially offset by the continued decline in
aftermarket product sales, primarily satellite radio sales, as well as lower
sales in Venezuela given foreign currency restrictions imposed by government.
Excluding Venezuela, Automotive sales increased approximately 5.4% for the
comparable periods.

Premium Audio sales for the Fiscal 2014 six month period were $81.0 million, a
decrease of 3.8% as compared to $84.2 million reported in the comparable
period last year. The decline in this segment was primarily related to lower
European sales and the phase out of certain products during the Fiscal 2014
period, offset by higher sales of the Company's new soundbar products, and
Bluetooth and cinema speakers.

Consumer Accessories sales were $91.2 million for the six month period ended
August 31, 2013, a decrease of 10.6% as compared to $101.9 million reported in
the comparable period last year. This decline was primarily related to lower
international sales as a result of the prior year conversion of analog to
digital broadcasting in Germany, and due to the economic climate in the
Eurozone. Also contributing to the decline was the planned and continued exit
of select consumer products domestically, partially offset by higher sales of
wireless Bluetooth speakers, and personal sound amplifiers, as well as due to
the Company's expanded distribution.

As a percentage of sales for the Fiscal 2014 six month period ended August 31,
2013, Automotive represented 54.1%, Premium Audio represented 21.5% and
Consumer Accessories represented 24.2%. As a percentage of sales for the
Fiscal 2013 six month period ended August 31, 2012, Automotive represented
51.6%, Premium Audio represented 21.8% and Consumer Accessories represented
26.4%.

The gross margin for the six month period ended August 31, 2013 was 28.8%, an
increase of 150 basis points as compared to 27.3% for the same period last
year. The increase in gross margin was primarily due to higher Automotive
gross margins, which increased 330 basis points and higher Consumer
Accessories gross margins, which increased 40 basis points. These increases
were partially offset by a 160 basis point decline in Premium Audio gross
margins as a result of lower international sales and the transition to newer
product lines.

Operating expenses for the six month period ended August 31, 2013 were $103.0
million, an increase of $7.7 million over $95.3 million reported in the
comparable Fiscal 2013 period. This increase was due primarily to higher
compensation and payroll expenses, an increase in research and development
costs, given the high volume of Automotive OEM programs in development and due
to owning Hirschmann for the full six month period in Fiscal 2014 as compared
to five and a half months in Fiscal 2013. Operating expenses were also up as
a result of related expenses associated with the Company's ERP system upgrade
and Klipsch integration, partially offset by lower professional and legal
fees, and lower occupancy costs.

The Company reported operating income of $5.7 million for the six month period
ended August 31, 2013 as compared to operating income of $9.9 million in the
comparable year ago period. Similar to the three month period comparisons,
operating income declined due to lower sales volumes and higher operating
expenses, many of which are not expected to repeat in Fiscal 2015. Net income
for the Fiscal 2014 six month period was $7.0 million or net income per
diluted share of $0.29 as compared to a net loss of $1.0 million and a loss
per diluted share of $0.04 for the comparable period last year. Net income
was favorably impacted by improved gross margins, improved performance of the
Company's equity investment, lower acquisition and other professional fees, as
well as funds the Company received as part of a class action settlement and
funds related to the Circuit City bankruptcy. Additionally, net income during
the Fiscal 2013 six month period was unfavorably impacted by expenses
associated with the patent lawsuit and losses on forward exchange contracts,
offset by income related to favorable legal settlements received by Klipsch.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the six month period ended August 31, 2013, was $22.6 million as compared to
EBITDA of $10.6 million for the comparable period in Fiscal 2013, an increase
of $12.0 million. There were approximately $3.4 million in adjustments related
to legal settlements, Circuit City recovery, warehouse relocation charge
recoveries, restructuring charges and stock-based compensation in Fiscal
2014. This compares to $12.8 million in adjustments in the comparable Fiscal
2013 period which are related to the patent settlement, foreign currency
exchange, acquisition related costs, Asia warehouse relocation charges and
stock-based compensation, offset by favorable Klipsch legal settlements. As a
result, Adjusted EBITDA for the Fiscal 2014 six month period was $19.2 million
as compared to $23.4 million in the comparable Fiscal 2013 period.

Non-GAAP Measures

EBITDA, Adjusted EBITDA and diluted adjusted EBITDA per common share are not
financial measures recognized by GAAP. EBITDA represents net income, computed
in accordance with GAAP, before interest expense, taxes and depreciation and
amortization. Adjusted EBITDA represents net income, computed in accordance
with GAAP, before interest and bank charges, taxes, depreciation and
amortization, stock-based compensation expense, restructuring charges,
litigation settlements and costs and foreign exchange gains or losses relating
to acquisitions. Depreciation, amortization, and stock-based compensation
expense are non-cash items. Diluted adjusted EBITDA per common share
represents the Company's diluted earnings per common share based on adjusted
EBITDA.

We present EBITDA, adjusted EBITDA and diluted adjusted EBITDA per common
share in this release and in our Form 10-Q because we consider them to be
useful and appropriate supplemental measures of our performance. Adjusted
EBITDA and diluted adjusted EBITDA per common share help us to evaluate our
performance without the effects of certain GAAP calculations that may not have
a direct cash impact on our current operating performance. In addition, the
exclusion of costs and foreign exchange gains or losses relating to our
acquisitions, litigation settlements and restructuring charges allows for a
more meaningful comparison of our results from period-to-period. These
non-GAAP measures, as we define them, are not necessarily comparable to
similarly entitled measures of other companies and may not be appropriate
measures for performance relative to other companies. Adjusted EBITDA should
not be assessed in isolation from or construed as a substitute for EBITDA
prepared in accordance with GAAP. Adjusted EBITDA and diluted adjusted EBITDA
per common share are not intended to represent, and should not be considered
to be more meaningful measures 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 Thursday, October 10, 2013
at 10:00 a.m. EDT. 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: 877-299-4454; international:
617-597-5447; pass code: 74691469). 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: 888-286-8010; international replay:
617-801-6888; pass code: 31088723).

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 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®, Excalibur® 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, 2013.

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, except share data)
                                            August31, 2013  February28, 2013
Assets                                      (unaudited)
Current assets:
Cash and cash equivalents                   $   13,386       $    19,777
Accounts receivable, net                    124,949          152,596
Inventory, net                              174,499          159,099
Receivables from vendors                    4,466            9,943
Prepaid expenses and other current assets   10,434           12,017
Income tax receivable                       438              448
Deferred income taxes                       3,515            3,362
Total current assets                        331,687          357,242
Investment securities                       13,717           13,570
Equity investments                          19,317           17,518
Property, plant and equipment, net          77,721           76,208
Goodwill                                    147,377          146,680
Intangible assets, net                      201,673          205,398
Deferred income taxes                       903              924
Other assets                                14,062           11,732
Total assets                                $   806,457      $    829,272
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                            $   71,125       $    56,894
Accrued expenses and other current          53,383           51,523
liabilities
Income taxes payable                        4,753            5,103
Accrued sales incentives                    15,740           16,821
Deferred income taxes                       171              178
Current portion of long-term debt           18,135           26,020
Total current liabilities                   163,307          156,539
Long-term debt                              108,691          148,996
Capital lease obligation                    5,943            5,764
Deferred compensation                       5,249            4,914
Other tax liabilities                       9,478            9,631
Deferred tax liabilities                    44,132           43,944
Other long-term liabilities                 14,353           14,948
Total liabilities                           351,153          384,736
Commitments and contingencies
Stockholders' equity:
Preferred stock                             —                —
Common stock                                274              254
Paid-in capital                             287,974          283,971
Retained earnings                           192,173          185,168
Accumulated other comprehensive loss        (6,757)          (6,497)
Treasury stock                              (18,360)         (18,360)
Total stockholders' equity                  455,304          444,536
Total liabilities and stockholders' equity  $   806,457      $    829,272



VOXX International Corporation and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except share and per share data)

(Unaudited)
                            Three Months Ended        Six Months Ended

                            August 31,                August 31,
                            2013         2012         2013         2012
Net sales                   $  183,818   $  191,715   $  376,790   $  385,751
Cost of sales               129,716      137,029      268,175      280,569
Gross profit                54,102       54,686       108,615      105,182
Operating expenses:
Selling                     12,602       11,507       25,725       24,712
General and administrative  29,043       29,591       57,981       54,816
Engineering and technical   9,226        6,693        17,961       14,104
support
Restructuring expense       989          —            1,292        —
Acquisition-related costs   —            55           —            1,651
Total operating expenses    51,860       47,846       102,959      95,283
Operating income            2,242        6,840        5,656        9,899
Other income (expense):
Interest and bank charges   (1,799)      (1,693)      (3,779)      (3,937)
Equity in income of equity  1,496        1,193        3,252        2,550
investees
Other, net                  5,712        (343)        5,728        (9,999)
Total other income          5,409        (843)        5,201        (11,386)
(expense), net
Income (loss) before income 7,651        5,997        10,857       (1,487)
taxes
Income tax expense          2,788        2,277        3,852        (507)
(benefit)
Net income (loss)           $  4,863     $  3,720     $  7,005     $  (980)
Other comprehensive income
(loss):
Foreign currency            1,758        (568)        (562)        (5,190)
translation adjustments
Derivatives designated for  3            (196)        314          100
hedging
Pension plan adjustments    (18)         —            (12)         —
Unrealized holding gain on
available-for-sale
investment securities       —            6            —            6
arising during the period,
net of tax
Other comprehensive income  1,743        (758)        (260)        (5,084)
(loss), net of tax
Comprehensive income (loss) $  6,606     $  2,962     $  6,745     $  (6,064)
Net income (loss) per       $  0.20      $  0.16      $  0.29      $  (0.04)
common share (basic)
Net income (loss) per       $  0.20      $  0.16      $  0.29      $  (0.04)
common share (diluted)
Weighted-average common     24,122,364   23,397,769   23,921,319   23,349,617
shares outstanding (basic)
Weighted-average common
shares outstanding          24,258,788   23,599,929   24,103,468   23,349,617
(diluted)



VOXX International Corporation and Subsidiaries

Reconciliation of GAAP Net Income to Adjusted EBITDA

(In thousands, except share and per share data)

(unaudited)
                                     Three Months Ended   Six Months Ended
                                                          August 31,
                                     August 31,
                                     2013      2012       2013       2012
Net income                           $ 4,863   $ 3,720    $ 7,005    $ (980)
Adjustments:
Interest expense and bank charges    1,799     1,693      3,779      3,937
Depreciation and amortization        3,991     5,365      7,961      8,149
Income tax expense (benefit)         2,788     2,277      3,852      (507)
EBITDA                               13,441    13,055     22,597     10,599
Stock-based compensation             154       64         489        127
Circuit City recovery                (940)     —          (940)      —
Net settlements                      (4,025)   —          (4,025)    7,565
Asia warehouse relocation            (208)     268        (208)      789
Restructuring charges                989       —          1,292      —
Acquisition related costs            —         55         —          1,651
Loss on foreign exchange as a result —         —          —          2,670
of Hirschmann acquisition
Adjusted EBITDA                      $ 9,411   $ 13,442   $ 19,205   $ 23,401
Diluted earnings (loss) per common   $ 0.20    $ 0.16     $ 0.29     $ (0.04)
share
Diluted adjusted EBITDA per common   $ 0.39    $ 0.57     $ 0.80     $ 1.00
share





SOURCE VOXX International Corporation

Website: http://www.voxxintl.com
 
Press spacebar to pause and continue. Press esc to stop.