SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMCNet:  VOXX International Reports Third Quarter 2014 Earnings [Travel & Leisure Close - Up]

[January 14, 2014]

VOXX International Reports Third Quarter 2014 Earnings [Travel & Leisure Close - Up]

(Travel & Leisure Close - Up Via Acquire Media NewsEdge) VOXX International Corp., announced financial results for its Fiscal 2014 third quarter and nine months ended November 30, 2013.

In a release on January 8, the Company noted: Pat Lavelle, VOXX International's President and CEO stated, "Our results in the third quarter and through the first nine months of the year are tracking in line with our plan and we continue to make progress in executing our strategy. While we lowered sales guidance slightly, we have done so due to higher exited product category sales and a strategic decision to transition away from some online business to protect future margins. All in all, everything is materializing as expected. The markets are improving modestly, we're strengthening relationships with customers, and we're expanding our global distribution. The new products and programs we introduced at CES have been met with a lot of enthusiasm and I remain confident that we will be able to generate organic growth as we move into our next fiscal year. Additionally, as a result of other income recorded this past quarter, we are raising our EBITDA guidance to $65 million and believe free cash flow will improve to $40 million." Fiscal Third Quarter Net sales for the Fiscal 2014 third quarter ended November 30, 2013 were $245.8 million, an increase of 1.1 percent compared to net sales of $243.0 million reported in the comparable year-ago period.


Automotive sales for the quarter ended November 30, 2013 were $121.0 million, an increase of 2.4 percent over $118.2 million reported in the comparable period last year. Automotive sales were positively impacted by the continued strength in the Company's global OEM manufacturing lines, and specifically for rear seat entertainment, digital TV tuners, antennas and remote start products. This growth was partially offset by lower aftermarket fulfillment sales, primarily in satellite radio, lower sales of aftermarket car radios, and year-over-year declines in Venezuela, which were expected given foreign currency restrictions resulting from current economic and political conditions.

Premium Audio sales for the Fiscal 2014 third quarter were $65.6 million, an increase of 3.0 percent as compared to $63.6 million reported in the comparable period last year. The increase in this segment was driven by higher sales of new soundbars, and Bluetooth, wireless and cinema speaker products, partially offset by lower sales volumes internationally. During the quarter, the Company also phased out of certain products to make way for new product introductions, and passed on certain business opportunities to protect margins on a go-forward basis.

Consumer Accessories sales were $58.8 million for the quarter ended November 30, 2013, a decrease of approximately 3.5 percent as compared to $60.9 million reported in the comparable period last year. This decline was primarily related to lower international sales and decreased volume of certain domestic consumer products that the Company continues to gradually exit, including digital camcorders, digital voice recorders and digital media players. Offsetting this were higher sales of several domestic product lines, including Bluetooth wireless speakers, our Personal Sound Amplifier and our new Shutterball products.

As a percentage of sales for the Fiscal 2014 third quarter ended November 30, 2013, Automotive represented 49.2 percent, Premium Audio represented 26.7 percent and Consumer Accessories represented 23.9 percent. As a percentage of sales for the Fiscal 2013 third quarter ended November 30, 2012, Automotive represented 48.6 percent, Premium Audio represented 26.2 percent and Consumer Accessories represented 25.1 percent.

The gross margin for the quarter ended November 30, 2013 was 28.0 percent, a decrease of 80 basis points as compared to 28.8 percent for the same period last year. The decrease in gross margin was primarily due to lower margins in the Company's Premium Audio and Consumer Accessories segments as a result of lower international sales and the discounting of certain products. Gross margins in the Automotive segment increased 230 basis points as a result of improved margins on several international product lines and higher sales of OEM related products. Lower sales in Venezuela also negatively impacted gross margins for the comparable quarters.

Operating expenses for the period ended November 30, 2013 were $52.2 million, an increase of $2.1 million over $50.2 million reported in the comparable Fiscal 2013 period. This increase was due primarily to higher compensation and payroll expenses as a result of increased salaries and new hires, increased trade show and related marketing expenses to support new product launches, and restructuring expenses associated with warehouse consolidation and the Company's ERP upgrade, which will both lower expenses in future periods. These increases were partially offset by lower occupancy costs and decreases in professional and legal fees.

The Company reported operating income of $16.6 million for the period ended November 30, 2013 as compared to operating income of $19.8 million in the comparable year ago period. The decline in operating income is directly attributed to lower gross profit and higher expenses, despite higher sales volumes. Net income for the Fiscal 2014 third quarter was $15.4 million or net income per diluted share of $0.63 as compared to net income of $13.2 million and net income per diluted share of $0.56 for the comparable period last year. Net income for the three months ended November 30, 2013 was favorably impacted by an increase in other income as a result of a $4.3 million payment due from an OEM customer due to a contract shortfall, offset by lower interest and bank charges and higher income generated from the Company's joint venture, ASA Electronics.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the period ended November 30, 2013, was $27.7 million as compared to EBITDA of $25.8 million for the comparable period in Fiscal 2013. There were approximately $4.2 million in income adjustments related to the OEM contract shortfall, stock-based compensation and restructuring charges, resulting in Adjusted EBITDA of $23.5 million for the Fiscal 2014 third quarter as compared to Adjusted EBITDA of $25.7 for the Fiscal 2013 third quarter.

Lavelle continued, "In the U.S., retail sell-in was strong and we had a number of product load-ins prior to the Holiday selling season in our Premium Audio and Consumer Accessories segments. Reports on holiday spending thus far have been mixed, with growth in smartphones and tablets continuing to drive industry sales. We're not expecting a robust spending environment based on sell-thru, though we do see a stable U.S. consumer market, with increased demand for automotive products. Internationally, the markets have stabilized and we're hopeful that we'll see modest improvements throughout the Eurozone over the coming year. I believe we're positioned to grow our business organically, especially as we're almost done exiting certain lower-margin product categories and given that some of our newer products and categories are performing well, including soundbars, music systems, Bluetooth wireless speakers and a host of our automotive solutions. As such, we believe we're in a better position to exceed both our top and bottom-line performance in FY15." Fiscal Nine Months Net sales for the Fiscal 2014 nine-month period ended November 30, 2013 were $622.6 million, a decrease of 1.0 percent compared to net sales of $628.8 million reported in the comparable year-ago period.

Automotive sales for the nine month period ended November 30, 2013 were $324.8 million, an increase of 2.4 percent over $317.3 million reported in the comparable period last year. The Automotive segment was positively impacted by higher sales of OEM products, both domestically and abroad, behind programs with Ford, Nissan, Bentley, and others. Additionally, sales were positively impacted by the extra two weeks of sales generated at Hirschmann Car Communication, as the business was acquired in mid-March of last year. This increase was partially offset by continued declines in the aftermarket, primarily satellite radio, as well as lower sales in Venezuela given foreign currency restrictions imposed by government. Excluding the impact of the decline in satellite radio and in Venezuela sales, both of which were expected, the Automotive segment grew by $26.4 million or 8.3 percent.

Premium Audio sales for the Fiscal 2014 nine-month period were $146.5 million, a decrease of 0.9 percent as compared to $147.8 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 this Fiscal year, offset by higher sales of the Company's new soundbar products, and Bluetooth, wireless and cinema speakers.

Consumer Accessories sales were $150.0 million for the nine month period ended November 30, 2013, a decrease of 7.9 percent as compared to $162.9 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, personal sound amplifiers, new ShutterBall products, as well as the Company's expanded distribution.

As a percentage of sales for the Fiscal 2014 nine-month period ended November 30, 2013, Automotive represented 52.2 percent, Premium Audio represented 23.5 percent and Consumer Accessories represented 24.1 percent. As a percentage of sales for the Fiscal 2013 nine-month period ended November 30, 2012, Automotive represented 50.5 percent, Premium Audio represented 23.5 percent and Consumer Accessories represented 25.9 percent.

The gross margin for the nine-month period ended November 30, 2013 was 28.5 percent, an increase of 60 basis points as compared to 27.9 percent for the same period last year. The increase in gross margin was primarily due to a 290 basis point improvement in gross margins in the Automotive segment, offset by lower margins in the Premium Audio and Consumer Accessories segment. For the Fiscal 2014 nine-month period, gross margins in both of these segments were unfavorably impacted by lower sales of certain higher margin products internationally. The Company reiterated that gross margins are tracking in line with plan for Fiscal year 2014.

Operating expenses for the nine-month period ended November 30, 2013 were $155.2 million, an increase of $9.7 million over $145.4 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 nine-month period in Fiscal 2014 as compared to eight 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 $22.2 million for the nine-month period ended November 30, 2013 as compared to operating income of $29.7 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 nine-month period was $22.4 million or net income per diluted share of $0.93 as compared to net income of $12.2 million and net income per diluted share of $0.52 for the comparable period last year. Net income was favorably impacted by improved gross margins, improved performance of the Company's equity investment, lower interest expense and bank charges, lower acquisition and other professional fees, as well as funds the Company received as part of a contract shortfall payment due, class action settlement and funds recovered related to the Circuit City bankruptcy. Additionally, net income during the Fiscal 2013 nine-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.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the nine-month period ended November 30, 2013, was $50.3 million as compared to EBITDA of $36.4 million for the comparable period in Fiscal 2013, an increase of $13.9 million. There were approximately $7.6 million in income adjustments related to a contract shortfall from one of the Company's OEM customers, restructuring charges, net settlements, the Circuit City recovery, Asia warehouse relocation expenses, and stock-based compensation in Fiscal 2014. This compares to $12.7 million in adjustments in the comparable Fiscal 2013 period which are related to net patent settlements, acquisition costs and foreign exchange losses related to our Hirschmann acquisition, Asia warehouse relocation charges and stock-based compensation. As a result, Adjusted EBITDA for the Fiscal 2014 nine-month period was $42.7 million as compared to $49.1 million in the comparable Fiscal 2013 period.

Lavelle concluded, "We're generating good cash flow and paying down our debt. Our strategy remains to be opportunistic in the M&A environment and barring acquisitions; we expect to have debt under $100 million by the end of our Fiscal year. Things are shaping up as planned and we look forward to finishing out our Fiscal year as we work towards increasing shareholder value, both near- and long- term." More information: www.voxxintl.com ((Comments on this story may be sent to newsdesk@closeupmedia.com)) (c) 2014 ProQuest Information and Learning Company; All Rights Reserved.

[ Back To Technology News's Homepage ]

OTHER NEWS PROVIDERS







Technology Marketing Corporation

800 Connecticut Ave, 1st Floor East, Norwalk, CT 06854 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2014 Technology Marketing Corporation. All rights reserved | Privacy Policy