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VOXX International Corp (VOXX) (Q4 2024) Earnings Call Transcript Highlights: Navigating ...

  • Net Sales: $469 million, down 12.2% year-over-year.

  • Gross Margin: Decreased by 80 basis points.

  • Operating Expenses: Improved by over 2%.

  • Non-Cash Impairment Charges: $14.2 million on intangibles.

  • Restructuring Expenses: $2.1 million.

  • Operating Loss: $44 million.

  • Net Loss Attributable to VOXX: $40.9 million.

  • Adjusted EBITDA: Loss of $3.4 million, down $6.3 million from previous fiscal year.

  • Automotive Segment Sales: $142 million, down approximately 19%.

  • Consumer Segment Sales: $327 million, down roughly 8.7%.

Release Date: May 15, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • VOXX International Corp (NASDAQ:VOXX) has maintained and even increased the number of OEM customers over the past two years, indicating strong business relationships and market presence.

  • Despite challenges, VOXX International Corp (NASDAQ:VOXX) has managed to maintain a leading position in the automotive aftermarket, holding 9 of the top 10 selling brands in remote start and security.

  • VOXX International Corp (NASDAQ:VOXX) is launching new products in the consumer segment, including the Flexus sound systems and Klipsch Music City broadcast Bluetooth speakers, which are expected to drive growth and improve gross margins.

  • The formation of BioCenturion LLC, a joint venture for the Biometrics segment, aims to streamline operations and reduce financial burdens while still allowing VOXX International Corp (NASDAQ:VOXX) to share in potential upsides.

  • VOXX International Corp (NASDAQ:VOXX) has a strong focus on cutting costs and enhancing operational efficiency, planning to reduce overhead by an additional 5% to 10% without impacting customer service.

Negative Points

  • VOXX International Corp (NASDAQ:VOXX) reported a significant operating loss of $44 million and a net loss attributable to VOXX of $40.9 million for the fiscal year.

  • The company experienced a decline in net sales by 12.2% year-over-year, indicating a challenging sales environment.

  • VOXX International Corp (NASDAQ:VOXX) faced gross margin reductions and had to write down inventory, impacting profitability.

  • The company has decided to exit the rear-seat entertainment business with Stellantis due to unprofitable conditions and challenging market dynamics.

  • Consumer sentiment and economic indicators suggest a tough fiscal 2025 ahead, with continued inflation concerns and potential impacts on consumer spending and business operations.

Q & A Highlights

Q: Can you provide an overview of VOXX International's financial performance for fiscal 2024? A: Patrick M. Lavelle, CEO & Director, reported that VOXX International faced a challenging fiscal year with net sales down 12.2% year-over-year at approximately $469 million. The company experienced an operating loss of $44 million and a net loss attributable to VOXX of $40.9 million. Adjusted EBITDA was also down, showing a loss of $3.4 million.

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Q: What are the major challenges VOXX International is facing, and how are they addressing them? A: CEO Patrick M. Lavelle mentioned ongoing global economic challenges, including inflation and supply chain issues, similar to the previous year. The company plans to cut an additional 5% to 10% of its total overhead and is reviewing all products and programs to rightsize the company based on current projections.

Q: What specific steps is VOXX taking to improve its Automotive segment? A: The Automotive segment sales declined by about 19%. VOXX is adjusting by reducing overhead and moving certain OEM manufacturing to Mexico. They also decided to exit the rear-seat entertainment business with Stellantis due to unprofitable conditions and are focusing on more profitable and consistent business areas.

Q: How is the Consumer segment performing, and what are the plans for this segment? A: The Consumer segment saw a decline of 8.7% in net sales. VOXX plans to introduce new products like the Flexus sound systems and Klipsch Music City broadcast Bluetooth speakers, which are expected to generate strong growth and better gross margins. However, the overall retail environment remains challenging.

Q: Can you discuss the new joint venture, BioCenturion LLC, and its significance for VOXX? A: CEO Patrick M. Lavelle explained that the joint venture between EyeLock and GalvanEyes Partners to form BioCenturion LLC aims to streamline operations and focus on profitability without the financial burden on VOXX. This move allows VOXX to share in potential upsides while focusing resources on its Automotive and Consumer segments.

Q: What are the financial strategies VOXX is implementing to navigate the current economic landscape? A: Loriann Shelton, Senior VP, COO & CFO, highlighted efforts to strengthen the balance sheet, including reducing operating expenses, eliminating redundancies, and enhancing supply chain operations. The company is also focused on improving profitability by closely evaluating profitability by brand, product line, and customer.

Q: How does VOXX plan to handle inventory and operational challenges in the coming fiscal year? A: Loriann Shelton mentioned that VOXX is working on lowering future working capital needs and has cleaned up inventory to position itself better for fiscal 2025. They are also automating more functions across departments to improve efficiency and reduce costs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.