VOXX International Corporation Reports Its Fiscal 2021 Third Quarter Financial Results

ORLANDO, Fla., Jan. 11, 2021 /PRNewswire/ -- VOXX International Corporation (NASDAQ: VOXX), a leading manufacturer and distributor of automotive and consumer technologies for the global markets, today announced financial results for its Fiscal 2021 third quarter and nine months ended November 30, 2020.

Commenting on the Company's results, Pat Lavelle, President and Chief Executive Officer of VOXX International Corporation stated, "We delivered a very strong third quarter with all segments reporting higher sales and improved bottom-line performance. Within Automotive, demand for our EVOLVE rear-seat entertainment system with Amazon's Fire TV continues to grow, with new OEM programs starting in our Fiscal 2022 second quarter, and the VSM and DEI acquisitions are fully integrated and performing well. Within Consumer, our premium audio product sales continue to increase significantly, as we have expanded our retail distribution, added key brands and enhanced our product offering. Further, the formation of 11 Trading Company is leading to new opportunities for us globally. Lastly, while the financial impact has yet to be felt, demand for EyeLock's iris authentication solutions has increased since the start of the pandemic, as are conversations with respect to the strategic process. We are on track for one of the best years in our Company's history from a profitability perspective and believe this is the beginning of the next wave of growth."

Fiscal 2021 and Fiscal 2020 Third Quarter Financial Comparisons

Net sales in the Fiscal 2021 third quarter ended November 30, 2020 were $201.1 million, an increase of $91.0 million or 82.6%, as compared to $110.1 million in the Fiscal 2020 third quarter ended November 30, 2019.

    --  Consumer Electronics segment net sales were $139.0 million as compared
        to $79.9 million, an increase of $59.1 million or 74.0%. The
        year-over-year growth was driven by higher premium audio product sales,
        which increased by $59.4 million or 111.6%. Higher sales of premium
        wireless computer speaker systems and premium mobility products,
        expanded retail distribution, and sales from the new distribution
        agreement with Onkyo and Pioneer Corporation drove the significant
        year-over-year increase. Other consumer electronics product sales of
        $26.4 million declined by $0.3 million or 1.1%, as compared to $26.7
        million.
    --  Automotive Electronics segment net sales were $61.5 million as compared
        to $30.0 million, an increase of $31.5 million or 105.1%. OEM product
        sales of $14.1 million increased by $3.5 million or 32.6%. Aftermarket
        product sales of $47.4 million increased by $28.0 million or 144.9%. The
        year-over-year growth within the segment was primarily driven by the
        Vehicle Safety Holding Corp. ("VSM") and Directed, LLC and Directed
        Electronics Canada Inc. ("Directed" or "DEI") acquisitions, as well as
        higher sales of OEM rear-seat entertainment systems and aftermarket
        security and remote start products.
    --  Biometrics segment sales of $0.3 million were up $0.2 million or 148.6%
        due to higher sales of EXT and NXT products.

The gross margin in the Fiscal 2021 third quarter was 28.9%, up 30 basis points compared to the prior fiscal year period. Driving the year-over-year increase was a 560-basis point gross margin improvement in the Automotive Electronics segment, primarily from the acquisitions of VSM and DEI, higher sales of higher margin aftermarket remote start and security products, and an increase in sales of OEM rear-seat entertainment systems. This was partially offset by a 180-basis point gross margin decline in the Consumer Electronics segment, primarily due to premium audio product mix, holiday promotions, and certain product line close-outs in light of new premium audio products coming to market. While Consumer Electronics segment gross margin declined year-over-year, gross profit increased by $16.5 million or 64.3%. Biometrics segment margins increased for the comparable period but the overall impact was minimal.

Total operating expenses in the Fiscal 2021 third quarter were $39.6 million, as compared to $31.3 million in the comparable Fiscal 2020 period, an increase of $8.2 million or 26.3%. The increase in operating expenses for the comparable periods was primarily related to operating expenses of the previously acquired VSM and DEI businesses, which accounted for approximately $4.7 million during the Fiscal 2021 third quarter. The remaining increases were primarily due to higher commission expense as a result of higher sales, new hires, increased salaries due to performance, higher professional fees, and an increase in research and development expenses due to the timing of new product launches compared to the prior year, among other factors. The Company continues to monitor its spending as it looks to lower fixed expenses and improve bottom-line performance.

The Company reported operating income of $18.6 million in the Fiscal 2021 third quarter, as compared to operating income of $0.1 million in the comparable year-ago period, an improvement of $18.4 million. Net income attributable to VOXX International Corporation was $18.3 million in the Fiscal 2021 third quarter, as compared to net income attributable to VOXX International Corporation of $2.5 million in the Fiscal 2020 third quarter, an improvement of $15.8 million. On a per share basis, in the Fiscal 2021 third quarter, the Company reported basic and diluted income per share attributable to VOXX International Corporation of $0.75 and $0.74, respectively, as compared to basic and diluted income per share attributable to VOXX International Corporation of $0.10 in the comparable year-ago period.

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") was $23.8 million in the Fiscal 2021 third quarter, as compared to EBITDA of $8.6 million in the Fiscal 2020 third quarter, an improvement of $15.2 million. Adjusted EBITDA in the Fiscal 2021 third quarter was $24.5 million, as compared to Adjusted EBITDA of $5.8 million in the comparable year-ago period, an improvement of $18.7 million.

Fiscal 2021 and Fiscal 2020 Nine-Month Financial Comparisons

Net sales in the Fiscal 2021 nine-month period ended November 30, 2020 were $401.1 million, an increase of $107.3 million or 36.5%, as compared to $293.8 million in the Fiscal 2020 nine-month period ended November 30, 2019. On a segment basis for the comparable Fiscal 2021 and Fiscal 2020 nine-month periods:

    --  Consumer Electronics segment net sales were $288.5 million as compared
        to $206.6 million, an increase of $81.9 million or 39.7% year-over-year.
    --  Automotive Electronics segment net sales were $111.4 million as compared
        to $86.5 million, an increase of $24.9 million or 28.8%.
    --  Biometrics segment net sales were $0.7 million as compared to $0.4
        million, an increase of $0.3 million or 76.6%.

The gross margin in the Fiscal 2021 nine-month period was 29.0%, up 130 basis points compared to the prior fiscal year period. Driving the year-over-year increase was a 180-basis point gross margin improvement in the Automotive Electronics segment and a 70-basis point gross margin improvement in the Consumer Electronics segment.

Total operating expenses in the Fiscal 2021 nine-month period were $96.8 million, as compared to $96.0 million in the comparable Fiscal 2020 period, an increase of $0.8 million or 0.9%. Approximately $9.4 million of operating expenses were related to the VSM and DEI acquisitions that were not in the comparable Fiscal 2020 nine-month period. Excluding the operating expenses associated with acquisitions, total operating expenses declined by $8.5 million or 8.9%.

For the Fiscal 2021 nine-month period, the Company reported operating income of $19.4 million, as compared to an operating loss of $14.7 million in the comparable year-ago period, an improvement of $34.1 million. Net income attributable to VOXX International Corporation was $17.3 million in the Fiscal 2021 nine-month period, as compared to a net loss attributable to VOXX International Corporation of $4.6 million in the comparable year-ago period, an improvement of $22.0 million. On a per share basis, the Company reported basic and diluted income per share attributable to VOXX International Corporation of $0.72 and $0.71 in the Fiscal 2021 nine-month period, respectively, as compared to a basic and diluted loss per share attributable to VOXX International Corporation of $0.19 in the Fiscal 2020 nine-month period.

For the Fiscal 2021 nine-month period, EBITDA was $34.1 million, as compared to EBITDA of $7.1 million in the comparable Fiscal 2020 nine-month period, an improvement of $27.0 million. Adjusted EBITDA in the Fiscal 2021 nine-month period was $35.1 million, as compared to Adjusted EBITDA of $3.9 million in the comparable year-ago period, an improvement of $31.2 million.

Balance Sheet Update

As of November 30, 2020, the Company had cash and cash equivalents of $21.3 million, as compared to cash and cash equivalents of $37.4 million as of February 29, 2020. The decline is due to the repayment of $20.0 million outstanding on the Company's Domestic Credit Facility. There was nothing outstanding as of November 30, 2020. Additionally, the decline was due to working capital needed to support higher sales in the Company's Fiscal 2021 third quarter and anticipated increases in the Company's Fiscal 2021 fourth quarter, as well as the cash used to fund the DEI acquisition. The Company expects to end Fiscal 2021 with a higher cash position compared to Fiscal 2020 year-end.

As of November 30, 2020, total debt stood at $7.2 million as compared to $8.2 million as of February 29, 2020. The total debt as of quarter-end relates solely to the Company's Florida mortgage. Total long-term debt, net of debt issuance costs stood at $6.0 million as of November 30, 2020 as compared to $6.1 million as of February 29, 2020.

Conference Call and Webcast Information

VOXX International will be hosting its conference call on Tuesday, January 12, 2021 at 10:00 a.m. Eastern. Interested parties can participate by visiting www.voxxintl.com and clicking on the webcast in the Investor Relations section or via teleconference (toll-free: 877-303-9079; international: 970-315-0461 / conference ID: 7656347). A replay will be available on the Company's website approximately one hour after the completion of the call.

Non-GAAP Measures

EBITDA, Adjusted EBITDA, and Diluted Adjusted EBITDA per common share are not financial measures recognized by GAAP. EBITDA represents net income (loss) attributable to VOXX International Corporation, computed in accordance with GAAP, before interest expense and bank charges, taxes, and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted for stock-based compensation expense, certain settlements, gains, and life insurance proceeds. Depreciation, amortization, and stock-based compensation 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 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 certain costs or gains relating to certain events 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 an appropriate measure for performance relative to other companies. EBITDA, Adjusted EBITDA, and Diluted Adjusted EBITDA per common share should not be assessed in isolation from, are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP.

About VOXX International Corporation
VOXX International Corporation (NASDAQ: VOXX) has grown into a worldwide leader in Automotive Electronics and Consumer Electronics, with emerging Biometrics technology to capitalize on the increased need for advanced security. Over the past several decades, with a portfolio of approximately 35 trusted brands, VOXX has built market-leading positions in in-vehicle entertainment, automotive security, reception products, a number of premium audio market segments, and more. VOXX is a global company, with an extensive distribution network that includes power retailers, mass merchandisers, 12-volt specialists and many of the world's leading automotive manufacturers. For additional information, please visit our website at www.voxxintl.com.

Safe Harbor Statement
Except for historical information contained herein, statements made in this release constitute forward-looking statements and thus 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 the: risk factors described in the Company's annual report on Form 10-K for the fiscal year ended February 29, 2020 and other filings made by the Company from time to time with the SEC. The factors described in such SEC filings include, without limitation: the impact of the COVID-19 outbreak on the Company's results of operations, the Company's ability to realize the anticipated results of its business realignment; cybersecurity risks; 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 electronics, consumer electronics and biometrics 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 restrictive debt covenants. Many of the foregoing risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. The Company assumes no obligation and does not intend to update these forward-looking statements.

Investor & Media Relations Contact:
Glenn Wiener, GW Communications (for VOXX)
Email: gwiener@GWCco.com

Tables to Follow


                                                                                                                     
       
         VOXX International Corporation and Subsidiaries

                                                                                                                          
       
              Consolidated Balance Sheets

                                                                                                                   
       
        
             (In thousands, except share and per share data)




                                                                                                                                                                                      November 30,              February 29,

                                                                                                                                                                                              2020                       2020



                                                                                                                                                                                      (unaudited)



            
              Assets



            Current assets:



            Cash and cash equivalents                                                                                                                                                              $
       21,337                $
        37,425



            Accounts receivable, net                                                                                                                                                                   155,322                      69,714



            Inventory                                                                                                                                                                                  138,607                      99,110



            Receivables from vendors                                                                                                                                                                       251                         230



            Prepaid expenses and other current assets                                                                                                                                                   17,880                      10,885



            Income tax receivable                                                                                                                                                                          454                         456



            Total current assets                                                                                                                                                                       333,851                     217,820



            Investment securities                                                                                                                                                                        1,827                       2,282



            Equity investment                                                                                                                                                                           22,182                      21,924



            Property, plant and equipment, net                                                                                                                                                          52,124                      51,424



            Operating lease, right of use asset                                                                                                                                                          4,811                       3,143



            Goodwill                                                                                                                                                                                    58,928                      55,000



            Intangible assets, net                                                                                                                                                                      92,797                      88,288



            Deferred income tax assets                                                                                                                                                                      56                          52



            Other assets                                                                                                                                                                                 1,413                       1,638




            Total assets                                                                                                                                                                          $
       567,989               $
        441,571




            
              Liabilities, Redeemable Equity, and Stockholders' Equity



            Current liabilities:



            Accounts payable                                                                                                                                                                       $
       80,177                $
        22,096



            Accrued expenses and other current liabilities                                                                                                                                              55,695                      34,046



            Income taxes payable                                                                                                                                                                         3,166                       1,523



            Accrued sales incentives                                                                                                                                                                    27,883                      12,250



            Contract liabilities, current                                                                                                                                                                3,396



            Current portion of long-term debt                                                                                                                                                              500                       1,107



            Total current liabilities                                                                                                                                                                  170,817                      71,022



            Long-term debt, net of debt issuance costs                                                                                                                                                   5,973                       6,099



            Finance lease liabilities, less current portion                                                                                                                                                386                         720



            Operating lease liabilities, less current portion                                                                                                                                            3,813                       2,391



            Contract liabilities, less current portion                                                                                                                                                   1,016



            Deferred compensation                                                                                                                                                                        1,827                       2,282



            Deferred income tax liabilities                                                                                                                                                              7,975                       3,828



            Other tax liabilities                                                                                                                                                                        1,123                       1,225



            Other long-term liabilities                                                                                                                                                                  5,570                       3,294




            Total liabilities                                                                                                                                                                          198,500                      90,861




            Commitments and contingencies



            Redeemable equity                                                                                                                                                                            2,959                       2,481



            Stockholders' equity:



            Preferred stock:



            No shares issued or outstanding



            Common stock:



            Class A, $.01 par value, 60,000,000 shares authorized, 24,416,194 and 24,306,194 shares issued and                                                                                             245                         244
    21,666,976 and 21,556,976 shares outstanding at November 30, 2020 and February 29, 2020,
    respectively



            Class B Convertible, $.01 par value, 10,000,000 shares authorized, 2,260,954 shares issued and                                                                                                  22                          22
    outstanding at both November 30, 2020 and February 29, 2020



            Paid-in capital                                                                                                                                                                            300,107                     299,228



            Retained earnings                                                                                                                                                                          139,458                     122,139



            Accumulated other comprehensive loss                                                                                                                                                      (16,046)                   (19,055)



            Less: Treasury stock, at cost, 2,749,218 shares of Class A Common Stock at both November 30, 2020 and                                                                                     (23,918)                   (23,918)
    February 29, 2020



            Less: Redeemable equity                                                                                                                                                                    (2,959)                    (2,481)




            Total VOXX International Corporation stockholders' equity                                                                                                                                  396,909                     376,179



            Non-controlling interest                                                                                                                                                                  (30,379)                   (27,950)




            Total stockholders' equity                                                                                                                                                                 366,530                     348,229




            Total liabilities, redeemable equity, and stockholders' equity                                                                                                                        $
       567,989               $
        441,571


                                                                             
          
                VOXX International Corporation and Subsidiaries

                                                                       
       
         Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)

                                                                         
         
              
                  (In thousands, except share and per share data)




                                                                                                                      Three months ended                                                  Nine months ended

                                                                                                 
              
                November 30,                                             
         
       November 30,



                                                                                                 2020                                         2019                                  2020                              2019




              Net sales                                                                                $
              201,065                                      $
           110,112                        $
           401,084  $
         293,812



              Cost of sales                                                                                        142,937                                                78,648                                 284,905         212,570




              Gross profit                                                                                          58,128                                                31,464                                 116,179          81,242




              Operating expenses:



              Selling                                                                                               12,761                                                 9,580                                  30,190          28,162



              General and administrative                                                                            21,128                                                16,689                                  51,668          51,896



              Engineering and technical support                                                                      5,676                                                 5,059                                  14,942          15,901




              Total operating expenses                                                                              39,565                                                31,328                                  96,800          95,959




              Operating income (loss)                                                                               18,563                                                   136                                  19,379        (14,717)




              Other (expense) income:



              Interest and bank charges                                                                              (471)                                                (751)                                (2,334)        (2,635)



              Equity in income of equity investee                                                                    1,761                                                   967                                   4,506           3,672



              Gain on sale of real property                                                                                                                               4,057                                                  4,057



              Investment gain                                                                                           42                                                                                           42             775



              Other, net                                                                                             (121)                                                (322)                                     21           1,869




              Total other income, net                                                                                1,211                                                 3,951                                   2,235           7,738




              Income (loss) before income taxes                                                                     19,774                                                 4,087                                  21,614         (6,979)



              Income tax expense                                                                                     2,334                                                 2,720                                   6,724           1,190




              Net income (loss)                                                                                     17,440                                                 1,367                                  14,890         (8,169)



              Less: net loss attributable to non-controlling interest                                                (811)                                              (1,097)                                (2,429)        (3,521)




              Net income (loss) attributable to VOXX International                                      $
              18,251                                        $
           2,464                         $
           17,319  $
         (4,648)
    Corporation



              Other comprehensive income (loss):



              Foreign currency translation adjustments                                                                  79                                                 (295)                                  3,608         (1,321)



              Derivatives designated for hedging                                                                      (43)                                                   13                                   (514)          (271)



              Pension plan adjustments                                                                                 (6)                                                    2                                    (85)             25




              Other comprehensive income (loss), net of tax                                                             30                                                 (280)                                  3,009         (1,567)




              Comprehensive income (loss) attributable to VOXX                                          $
              18,281                                        $
           2,184                         $
           20,328  $
         (6,215)
    International Corporation




              Income (loss) per share - basic: Attributable to VOXX                                       $
              0.75                                         $
           0.10                           $
           0.72   $
         (0.19)
    International Corporation




              Income (loss) per share - diluted: Attributable to VOXX                                     $
              0.74                                         $
           0.10                           $
           0.71   $
         (0.19)
    International Corporation




              Weighted-average common shares outstanding (basic)                                                24,197,786                                            24,418,313                              24,196,393      24,458,926




              Weighted-average common shares outstanding (diluted)                                              24,677,525                                            24,625,410                              24,532,329      24,458,926


                                                                        
     
     Reconciliation of GAAP Net Income Attributable to VOXX International Corporation to EBITDA, Adjusted EBITDA, and
                                                                                                    Diluted Adjusted EBITDA per Common Share




                                                                                                                                Three months ended                                                 Nine months ended

                                                                                                                                  November 30,                                                  November 30,



                                                                                                              2020                                        2019                                         2020                   2019




              Net income (loss) attributable to VOXX International                                                  $
              18,251                                       $
              2,464                      $
        17,319  $
           (4,648)
    Corporation



              Adjustments:



              Interest expense and bank charges (1)                                                                                325                                                     625                             1,907             2,269



              Depreciation and amortization (1)                                                                                  2,904                                                   2,796                             8,128             8,313



              Income tax expense                                                                                                 2,334                                                   2,720                             6,724             1,190




              EBITDA                                                                                                            23,814                                                   8,605                            34,078             7,124



              Stock-based compensation                                                                                             768                                                     471                             1,454             1,816



              Gain on sale of real property                                                                                                                                           (4,057)                                           (4,057)



              Settlement of Hirschmann working capital                                                                                                                                    804                                                804



              Investment gain                                                                                                     (42)                                                                                    (42)            (775)



              Life insurance proceeds                                                                                                                                                                                    (420)          (1,000)




              Adjusted EBITDA                                                                                       $
              24,540                                       $
              5,823                      $
        35,070    $
           3,912




              Diluted income (loss) per common share attributable to                                                  $
              0.74                                        $
              0.10                        $
        0.71   $
           (0.19)
    VOXX International Corporation




              Diluted Adjusted EBITDA per common share attributable to                                                $
              0.99                                        $
              0.24                        $
        1.43     $
           0.16
    VOXX International Corporation




              (1)              For purposes of calculating
                                  Adjusted EBITDA for the
                                  Company, interest expense and
                                  bank charges, as well as
                                  depreciation and amortization,
                                  have been adjusted in order to
                                  exclude the non-controlling
                                  interest portion of these
                                  expenses attributable to
                                  EyeLock LLC.

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SOURCE VOXX International Corporation