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VOXX International Corporation Q4 net sales $122.2 million

Staff Writer | May 15, 2018
VOXX International Corporation announced its financial results for its Fiscal 2018 fourth quarter and year ended February 28, 2018.
VOXX International
VOXX International   Automotive segment sales were $45.1 million
Net sales for the Fiscal 2018 fourth quarter ended February 28, 2018 were $122.2 million as compared to net sales of $124.9 million in the comparable year-ago period, a decline of $2.7 million or 2.1%.

Automotive segment sales were $45.1 million as compared to $43.1 million for the comparable Fiscal 2018 and 2017 fourth quarters, an increase of $2.0 million or 4.7%.

The year-over-year increase in net sales was primarily driven by higher sales of OEM product lines, particularly the company's next-generation, EVO-based rear-seat infotainment system as new programs with General Motors and Ford began in the company's Fiscal 2018 third quarter.

Consumer Accessories segment sales were $39.8 million as compared to $38.8 million, an increase of $0.9 millionor 2.4%. The year-over-year increase in net sales was driven primarily by wireless speaker sales as well as a modest increase in Project Nursery sales, among others.

Premium Audio segment sales were $37.4 million as compared to $43.0 million for the comparable Fiscal 2018 and Fiscal 2017 fourth quarters, a decrease of $5.7 million or 13.1%.

The decline in net sales was primarily driven by retail and discount promotions in the prior fiscal year period, which did not repeat in the current fiscal year fourth quarter.

The gross margin for the Fiscal 2018 fourth quarter came in at 26.4% as compared to 28.8% for the same period last year.

The year-over-year decline was related to lower gross margins in the Automotive segment (25.6% vs. 30.1%), Premium Audio segment (31.0% vs. 32.1%) and Consumer Accessories segment (22.9% vs. 24.0%) when comparing the Fiscal 2018 and Fiscal 2017 fourth quarters.

Each of the company's segments reported lower gross margins due to product mix shifts in the comparable fiscal year periods.

Total operating expenses for the Fiscal 2018 fourth quarter were $37.2 million as compared to $39.7 million in the Fiscal 2017 fourth quarter, an improvement of $2.5 million or 6.2%.

The year-over-year improvement was primarily related to initiatives undertaken by the company to lower its fixed expenses.

When comparing the Fiscal 2018 and Fiscal 2017 fourth quarter periods, general and administrative expenses declined by $1.5 million and engineering and technical support expenses declined by $1.5 million.

These improvements were partially offset by a $0.5 million increase in selling expenses as the company increased its advertising spend to support new product introductions and online sales, primarily in its Premium Audio and Consumer Accessories segments.

The company reported an operating loss of $5.0 million in the Fiscal 2018 fourth quarter as compared to an operating loss of $3.7 million for the comparable Fiscal 2017 period.

Total other income for the Fiscal 2018 fourth quarter was $0.5 million as compared to a loss of $0.7 million in the comparable year-ago period. Interest and bank charges declined by approximately $0.8 million due to a lower average outstanding balance on the company's Credit Facility compared to the prior year period.

Net income from continuing operations was $8.4 million in the Fiscal 2018 fourth quarter as compared to a net loss from continuing operations of $7.9 million in the corresponding year-ago period.

Net income from discontinued operations, net of tax, in the Fiscal 2018 fourth quarter was $2.3 million as compared to net income from discontinued operations, net of tax, of $5.6 million in the Fiscal 2017 fourth quarter.

Net income attributable to VOXX International Corporation was $12.6 million in the Fiscal 2018 fourth quarter as compared to a net loss attributable to VOXX International Corporation of $0.1 million.

The company reported earnings per share attributable to VOXX International Corporation of $0.52 on a basic per share basis and $0.51 on a diluted per share basis as compared to a loss per share attributable to VOXX International Corporation of $0.00 on a basic and diluted per share basis in the comparable year-ago period.

The company reported earnings before interest, taxes, depreciation and amortization "EBITDA) of $0.9 million and Adjusted EBITDA of $1.0 million for the Fiscal 2018 fourth quarter. This compares to EBITDA of $8.0 million and Adjusted EBITDA of $8.1 million for the comparable year-ago period.

Fiscal 2018 net sales were $507.1 million as compared to net sales of $514.5 million in Fiscal 2017, a decrease of $7.4 million or 1.4%.

Automotive sales of $155.5 million declined year-over-year by $15.2 million, driven by lower satellite radio sales, and lower OEM rear-seat infotainment sales given the transition to the company's new, EVO-based system, which launched with General Motors and Ford toward the end of the Fiscal 2018 third quarter.

These decreases were partially offset by a net increase in OEM remote start programs and in aftermarket overhead and headrest infotainment systems.

Consumer Accessories segment sales of $178.8 million increased by $2.5 million or 1.4%.

The year-over-year increase was primarily related to higher sales of the company's new Striiv wearables, new Project Nursery product lines, wireless speaker systems, and higher international sales, which offset declines in other categories, such as 360Fly action cameras, hook-up products and clock radios, among others.

Premium Audio segment sales of $172.4 million increased by $5.6 million or 3.4% due to higher sales of home entertainment speakers, including various lines of HD wireless speakers, wireless soundbars, Klipsch Heritage products and wireless and multi-room streaming audio systems.

These increases were partially offset by lower sales of mobility products, commercial speakers and a decline in the European market due to an unfavorable shift in product mix.

The gross margin for Fiscal 2018 came in at 26.1% as compared to 28.0% for the same period last year, a decline of 190 basis points.

The year-over-year decline was related to lower gross margins in the Automotive segment (25.6% vs. 27.4%), Premium Audio segment (31.0% vs. 33.0%) and Consumer Accessories segment (21.7% vs. 23.6%).

Automotive segment gross margins were impacted by delays in the launch of new, EVO-based rear-seat infotainment programs, which were slated to begin early in the fiscal year but began late in the Fiscal 2018 third quarter, as well as higher aftermarket product sales, which tend to carry lower gross margins.

Premium Audio segment gross margins were impacted by lower sales of higher margin commercial speakers, and lower margins associated with product close-outs to make way for newer models in the coming year.

Offsetting these declines in the Premium Audio segment were higher sales of higher margin home entertainment speakers and systems.

The decline in Consumer Accessories gross margin was primarily related to higher volume sales of fulfillment programs, higher freight charges and a one-time vendor settlement charge, among other factors.

Total operating expenses in Fiscal 2018 were $151.4 million as compared to $152.2 million in Fiscal 2017, an improvement of $0.8 million or 0.5%.

When comparing the Fiscal 2018 and Fiscal 2017 twelve-month periods, general and administrative expenses declined by $0.6 million and engineering and technical support expenses declined by $3.1 million.

These improvements were partially offset by a $2.9 million increase in selling expenses as the company increased its advertising spend to support new product introductions.

The company reported an operating loss of $19.1 million in Fiscal 2018 as compared to an operating loss of $8.2 million for the comparable Fiscal 2017 period.

Total other expenses in Fiscal 2018 were $5.0 million compared to $0.8 million in Fiscal 2017.

Within this, interest and bank charges declined by $1.1 million due to a lower average outstanding balance on the company's Credit Facility compared to Fiscal 2017.

Following the sale of Hirschmann on August 31, 2017, the company repaid its entire Credit Facility balance.

Equity in income of equity investee increased by $0.4 million year-over-year. Additionally, in Fiscal 2018, the company recorded a $1.4 million gain on its investment in Rx Networks.

The big variance in total other expense was in other, net, driven primarily by net losses on foreign currency, which amounted to $8.8 million in Fiscal 2018 as compared to $0.5 million in Fiscal 2017.

Included in the foreign currency losses for the year ended February 28, 2018 are losses on forward contracts totaling $6.6 million which were incurred in conjunction with the sale of Hirschmann.

The company reported a net loss from continuing operations of $6.7 million in Fiscal 2018 as compared to a net loss of $9.3 million in Fiscal 2017.

Net income from discontinued operations in Fiscal 2018 was $34.6 million as compared to net income of $6.1 million in Fiscal 2017.

As a result, net income attributable to VOXX International Corporation in Fiscal 2018 was $35.3 million as compared to $4.4 million in Fiscal 2017.

In Fiscal 2018, the company reported earnings per share attributable to VOXX International Corporation of $1.45 on a basic per share basis and $1.44 on a diluted per share basis as compared to earnings per basic and diluted share attributable to VOXX International Corporation of $0.18 in Fiscal 2017.

In Fiscal 2018, the company reported EBITDA of $41.1 million as compared to EBITDA of $30.1 million in Fiscal 2017, an increase of $11.0 million. Adjusted EBITDA in Fiscal 2018 was $10.7 million as compared to Adjusted EBITDA of $30.9 million in Fiscal 2017.

For the period ended February 28, 2018, the company had cash and cash equivalents of $51.7 million as compared to cash and cash equivalents of $1.0 million as of February 28, 2017, an increase of $50.8 million.

Additionally, cash and cash equivalents increased by approximately $14.2 million since the end of the company's Fiscal 2018 third quarter.

Total debt as of February 28, 2018 was $18.9 million, an improvement of $91.6 million as compared to February 28, 2017, as the company used the net proceeds from the sale of Hirschmann to reduce the majority of its total debt position and all of its borrowings outstanding under its domestic credit facility.

Total long-term debt as of February 28, 2018 was $8.5 million as compared to $97.7 million as of February 28, 2017, an improvement of $89.3 million.


 

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