VOXX - Earnings call transcript Q1 2019 | VOXX International Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the VOXX International Fiscal 2019 First Quarter Conference Call. [Operator Instructions] Later, we will conduct a question-and-answer session, and instructions will follow at that time.

As a reminder, today's conference is being recorded. I would now like to turn introduce your host for today's conference, Mr. Glenn Wiener, Investor Relations. ahead. go please Sir,

Glenn Wiener

Good Quarter welcome Results Les. Fiscal VOXX XXXX First Conference morning, you, to and International's Thank Call.

those replay Our live call available a call. on webcast able for is our Web make today site, www.voxxintl.com, is today's who aren't being to and

Speaking Chief be Lavelle, Financial Chief morning Officer. President Senior Vice will Michael Officer; and Stoehr, this President for and management Pat Executive and our

Board, investors is remarks, of Following with the Chairman a wishing those to have for Shalam, during ask we'll and their of the today session the also us available will John questions. Q&A call. be portion Q&A

Before currently our statements everyone factors that made available are assumes no information. we statements update that except herein, February Form call to business detailed today's in forward-looking Pat? anyone contained ended XX-K over webcast The office such risk Further, and follow-up company information At call send begin, at And or me I'd to to forward-looking statements. on would associated responsibility like on for any our based remind at for with President like constitute historical any our me CEO, please my and XXX-XXX-XXXX, if I'd at turn you to has the feel this gwiener@GWCco.com. Lavelle. email reach to the can free period XX, an Pat XXXX. time, questions, are

Pat Lavelle

Thank you, Glenn.

losses a operating sales as our expected, smaller significantly the although resulting down our are you results, in from As saw expenses were comparable lower, for quarters.

Audio Accessories programs, developments as and year-end year, new commercialization positive new healthcare distribution in up lower the the in in our I expanded have EyeLock's call, but our the launches very space. our expect within two be to second-half the first-half noted we Consumer and Premium retail As on segments, top segment our line in of we

Automotive in of we I summarize results. take on then Mike lower cover cost. all my to will and anticipate Automotive, to And fixed further the our will business steps continue by million segment improvement. our an addition, million our continue. expect basis, remarks, improvements resulting this net profitable and side, declined operating increased net sales we expense in realign operating expenses financial and was In pre-tax Within and we and segment income XX%, on $X.X both The in will which operating an approximate income $X nearly

has growth and for by play this modest and our outlook Lincoln Our programs the we're for Automotive with programs for not positioned additional year GM. believe driven changed, and new play we Ford the

programs slightly our later several vehicles we're which of additional if starts EVO. down OEM has have a and up out EVO both this is new second-half. and and will generate with Mazda why multiyear year OEMs, the and R&D to momentum year. rolling did for developing We The fiscal Nissan were other years, QX resources including engaged in but program Remote with increased, with this this business, starting level aftermarket actively addition in when and next with we Subaru successful, interest we the inbound that invested in pick OEM will

declines, modest like telematics audio group. see but to continues some business aftermarket Our categories and

Premium ADAT give distribution should Premium by and OEM evidenced our and basis consistent profitability. us margins launching quarter, better products results gains as anticipated will sales is million new In declined remote improved my margins. Audio XXXX cut we have the We in categories with and to This in certain results show gross line the top declines protect Overall, quarter. business last by remarks and our XXX as first quarter improve in back year-over-year points. $X.X programs this in fiscal start Audio,

anticipated pre-tax by takeaway million a operating to segment million $X.X income improvement increase we $X.X declined in is The is $X.X Additionally, and income. a key operating expenses million. generated This net in bottom fiscal XXXX. Reference and in of Reference be improvements new and show our loaded the QX subwoofers, Buy in Premiere will launch speakers of will and Best see series August. line

sixth most system our of month. being subwoofer by enhancing well, Klipsch this installation speaker to With the smart introduced we iconic with over products have years first launched control our And ago, advanced in as we Orange have far generation XX market August industry-leading the our custom coming platforms compatible portfolio. a home

channels. Heritage Heritage QX, were new in amps, introduced higher-end into is moving line, speakers, and new now our headphones and Our soundbars, distribution

and declined business Margaritaville, year anticipating with Rock growth Theaters, programs commercial fiscal previously iPic quarter-over-quarter but Hard biggest the this we're new Our in many are due to Hotels. The QX, I'd discussed.

on we Hotel, are the huge X,XXX restraunts, water a and Margaritaville project vacation encompassing fourth our working Margaritaville, For rentals, the park.

secured, a moving smart the we first anticipate number markets, on are down should see go We next two we in have next quarter, new we're continue security years. programs the a home the year. of but a Rock the will through several transition. when the and to first been fiscal planned. segment into drawings rollouts with project that of Hotels, products in New second much along X growth Orleans the working Hard pipeline for Phase recently Consumer on new with with Accessories distribution working and this in Results with stronger and quarters, now top our comparing year, over second-half more Consumer continues our Accessories, And into platform are in and line Within the

pressure, a well you Consumer part technology and Motion as and wearable During ahead. the our service evolve, millions into more. I'm a in it and and program, Partners all could of for rates, wearable as from million to XX been been grow as has to logistics innovation wellness This walking figure and members years the new fitness is A levels, financial to wellness wearables incentives as years Life. UnitedHealthcare to programs priority. daily continues expected year-end to UnitedHealthcare goals. Over as in the time, as than Samsung, national the we're that that the other space, a that program healthcare and for report and working VOXX-supplied such corporate and with and in be and is UnitedHealthcare's world-class companies wearables results a partner Qualcomm expected wearables program excited about simply heart Striiv provide blood coming were contributor fulfillment on glucose a to program, call, wellness details exponentially International be such providers providing working to today able issues a VOXX the year, tracking quite to named as as healthcare this program for making for tracking, more some some incorporated Accessory asthma, incorporate conference partners Garmin, offers noted top distribution are and Apple time, Endeavour's tracking health respiratory of of meeting devices program more wellness-related our spoke this is we've with I and be more strong expected

Additionally, gain traction commercialization EyeLock continues to moving phase. into the

of much agreement income time We first fiscal launch a have are with the next signed and quarter. to revenue a year. and definitive Media, and build impact from is program over working We're This that will vending EyeLock's launch this discussions field-use them but lot received ViaTouch we can't larger our the and yet Also will talk technology new with difficulty] and POs machines fiscal [technical intelligent which XXXX, our are in smart and small embedding artificial quarter, also the advancement more and in have opportunities, side. within advanced into in while about third and second Accessories, the a and Consumer security products testing our moving gaming we momentum launching pharmaceutical we the companies distribution applications. new will markets, home on the

quarters and Warehouse, Consumer and video be floodlight category. this other down Canada, Our of we at significantly second-half our EyeLock bodes for we scheduled Dish Depot, of Network, summary, place. our anticipate Consumer Automotive Lowes.com, in True profitability. growing stronger in segment. Accessories year, improvement will but and Audio segment programs Accessories first-half in the battery build-out Lowe's expected to and camera doorbell, sold the several within the are ABC rechargeable And the Home UHC our segment, now launch year is more in the especially in see will with stronger location Premium on-time expect resulting and dates the in thereafter, through margins pack growth Menards, Value, looking with PRIZE, domestic Myer, The the which in to build segment siren, In well be in we momentum

balance We and over cash to programs, potential continue now. to efficiency and concludes turn position our This reduction my call strong and sheet. we're look the cost now remarks. I'll evaluate at and divestitures to Michael? continuing leveraging And Mike acquisitions

Michael Stoehr

Good morning, off respect with few Pat's a Pat. everyone. comments I'll to building P&L our provide additional remarks. Thanks,

with points our XXX Premium the sales were previously, margins As by we down while driver. key basis improved gross XX.X%, Audio discussed

and You can press in see breakdown XX-Q. our the release Form segment our

and declined across technical and expenses expenses. million with XX.X% selling, administrative $X.X by operating expenses, Our engineering or declines general support

We advertising fixed sales. other lower have offset our taken as higher by online advertising commissions, expenses, cost, expenses steps to which fees, fees for led and platform to lower T&E G&A professional [ph] partially marketing and salaries such related to web ecommerce

net year. footnote in approximately as as first I'd increased And gain technical million we equity compared of of $X While which continuing information first other support invest compared ASA a like as our reduced to segments. $XXX,XXX. provides loss in approximately by quarter. select at innovation. $XXX,XXX, year's quarter Equity of resulted Electronics to portion draw Interest first was $XXX,XXX financial bank last the of engineering currency ownership to income interest for approximately reduction XXXX, attention to was this last recorded expenses net our of relatively to in $XXX,XXX in sales quarter in also a and currency $XXX,XXX in loss, income the foreign Interest shift and to declined fiscal declined a by income million $X.X for XX-Q, charges foreign we $XXX,XXX other our investees XX and a The Form periods. we're unchanged major as approximately in timing-related expenses by debt. of net related both was in approximately

million our million, quarter. pretax of of million a pre-tax $XXX,XXX. segment million Consumer see, And of Automotive will of Audio $XXX,XXX Premium first posted posted income $X.X last a approximately loss net our you improvement Electronics than $X.X As $X.X posted income improvement. an approximately higher segment $X.X and year's pretax net a

improve with on Program to build based Accessories will Motion the EyeLock expect and high second-half sales of next margin revenue year though Consumer the Pat new UHC covered, the in more from in we the that year. However, associated

tax first losses tax statutory excluding offset an projecting is While U.S. with in by rate second-half should effective than money sheet. rate statutory the business. our than the major more year credits. result XX.XX% non-controlling items. of rate of as the than annual due rates higher U.S. XX% anticipate effective anticipated profits the of we local is in is EyeLock our of offset for to related company any state no changes We a The balance foreign a lost The taxes, income the seasonality quarter, losses in from first-half. this the annual discreet taxes LLC, respect and interests R&D were There of higher of XX% benefit to tax to income partial at the rate

of debt the Form XX And was million our deposition relates to reduced Europe. long-term outstanding ready prepared $XXX,XXX. reduced As open our to debt facility. footnote for line debt you This approximately will a questions. by capital was the see $XX.X our our domestic There $XXX,XXX. call small of remarks working All concludes by in approximately in on and XX-Q, up is we're and nothing credit now our mortgages

Pat Lavelle

Okay…

Operator

Our and the of line Instructions] Company. James Cowen with comes from first [Operator question Medvedeff

now line open. Your is

James Medvedeff

Hi, good guys. morning,

Pat Lavelle

James. morning, Good

Michael Stoehr

Good morning.

James Medvedeff

of of ask items. to these a couple wanted expense I some questions outlook about for So the

R&D or by $XXX,XXX did timing, that technical benefit mean that? a of mentioned You sort you from had support what

Pat Lavelle

quarter, you the Basically timing. into planned of to or depending on quarter second that first in probably the the projects. third There's we expenses -- the some had NRE incur also moved know,

offset the in, NRE comes will As of the some it expenses.

particular with the So, development at times those things the where in process. are we depending customer move on around

James Medvedeff

in something down way million in back the all or between kind of to $X.X X.X, quarter the bounces So back X.X? up to what, from

Pat Lavelle

-- that see the say is would $X million this I probably so somewhere range. more Again, it in you

James Medvedeff

Okay, thank you. perfect,

was EBITDA looking The below other -- we what a were question that I bit so had is the for. quite

about is and thought totals you the the So for a the of year? have question year, a of for that unfold does do sort that the rest what how

Pat Lavelle

that as is is mean stronger I we're of a year will thing Well, of the the that anticipating what the programs different number launch. be second-half

programs different And start with for start fourth We quarter. this GM have number vehicles we launched the the of third, and happen second, a schedule And that a we'll under of the EyeLock. have quarter program. will in motion

better are to to a start. year move anticipate these we programs we in performance when second-half the as the So of much slated

James Medvedeff

-- thanks. is EyeLock, -- to partner Okay, significant just from And the other for you which a sharing sharing more talked about the one now, with benefit rather the them the or losses ask -- is lot I'll you arrangement… the from there and the with

Pat Lavelle

the minority Yes, partners.

James Medvedeff

Yes.

Pat Lavelle

Yes.

James Medvedeff

That a say number down, probably losses what it's smaller looks the next look trending does though go to like year? as but be been that as

Pat Lavelle

Well, it with on we're where depends we programs that on. the are working

positive been projections when have late talk be depending away, would programs EyeLock we but what of months about programs, probably and some That too that to year. advised XX-XX We probably we've being we're could won next them. be XX on say start, advised, early at hitting it's those to

James Medvedeff

year? fiscal next Late

Pat Lavelle

Yes.

James Medvedeff

you. Thank right. all Okay,

Pat Lavelle

James. You're welcome, you, thank and

Operator

Eric Our next Capital. with the Landry of question BML line comes from

is line now Your open.

Eric Landry

morning. Good

Pat Lavelle

morning. Good

Eric Landry

to was fees? mentioned was the professional that for What the of reimbursement G&A amount

Pat Lavelle

recovery approximately had that the million due a for a fees and to quarter. We legal lawsuit of counterfeit $X was

Eric Landry

$XX rate run that that So in we million in would quarters forward ahead… look what to is G&A,

Pat Lavelle

What approximately we're that million overhead on quarter planning call our indicated $XX by or on year-over-year. had last I the last year my dropping

will $XX year, started, of in it the we the the as process off second-half okay, we into and move we the But projected to approximately second-half in and we're latter for the of started year. tail we the Obviously, drop Okay. year, started overhead of our million. part the because

of little because the the decision. a that obviously, better of do than impact we'll that counterfeit expect We bit

Eric Landry

Okay, Would go EyeLock, over words… please the model revenue in for you great. other

Pat Lavelle

royalty on that a at with let's fact on high, we're okay? So is basis, EyeLock it's profit, royalty. gross EyeLock So a of works what looking a say, the based because

be our depending P&Ls. But will of applied. our there be applying XXX% royalty on way So different it at different the look the would gross applications we it, levels types hit profit almost of technology where when we're it would

Eric Landry

per or Okay, paid you per are scan device?

Pat Lavelle

We are paid per device.

Eric Landry

great. Okay,

a you start remote Subaru multiyear the with mentioned program in So program?

Pat Lavelle

Yes.

Eric Landry

How them? many you are on with other OEs

Pat Lavelle

and Currently, right are pretty Subaru, some that's business. on are much we're There supplying working products we to it on Ford, now. remote start Motorola, that our

in but point. I to can't We that at this speak have some RFQs really place,

Eric Landry

radios? And Okay. automotive of what percent satellite revenue is

Pat Lavelle

say would at this than I XX% point. less

Eric Landry

all I cash And Okay. would is than you why expected have that then going the interest mind in higher would it over what sheet? lastly, given expense is the balance

Michael Stoehr

if fees, the Mike the the the Stoehr is This Right. expense unused charge debt, debt includes of facility. see of bank speaking. cost factoring small using that debt the was that, not charges, The we interest, amortization interest give a Interest itself you to when were put card is a was a credit The and you amortization $XXX,XXX cost. the of was lines for charges idea. component just number together, Of portion, $XXX,XXX now. bank the $XXX,XXX unused $XXX,XXX rough credit and cost, right

So interest, number bank that worldwide. only not charges but carries carries

Eric Landry

Thanks.

Operator

Kahn comes from Kahn question Brothers. with next Our Thomas

open. now is Your line

Thomas Kahn

pushing we am some know And trying that that facial many the -- you of very what we family Pat. need in presentation, only -- EyeLock. EyeLock or but see spoke on to figure maybe is exciting most sentences Hi, you two VOXX facial briefly better may cases. And very different EyeLock. recognition is during And is the you better your not Probably I than out are part hard. one of

a per that want. commentary were be that the for someone you iris more who cases, someone charging or should EyeLock of for $X.XX if some they you is EyeLock addressing. in a example, and market element and It more Could for and little had So and unit that be and on iris any had were making iris please? give charging dollar facial number else facial desirable desirable extra is well us that's security very they

Pat Lavelle

over be Sure. is There When which positives. do, XX,XXX numbers have in XXX% are live false eye might compare one we positives. fingerprint, but you compare themselves. when speak with applications agree you to false it a you. is scan, And -- When certain trillion one We have a facial a one compare got in one you the X.XX you million false point what it's were sufficient double positives. iris facial, for a you

comes So, from… the level of security that

Thomas Kahn

you can which market just that before into I agree look, with are broad and and facial. can will saying. way lock for better, on and I more I a said iris what The competitive XXX% I say, paying Fort they a it's -- want don't that know ask give is we question there different completely are the less a interrupt, is, basis people or price Pat, you you to address on you you market the with is says we we a where to facial do gets have this for Knox address and either

we We secure, most want have iris. have the to

saying? You follow what am I

Pat Lavelle

Yes, iris because with a an facial -– is lot you from premium cost major a standpoint, of focus came iris there facial now So, new introduction there technology, there to for for as that a there competitive the end up and the okay? schemes over implement security. out, some was then as a with on the far is iris not facial. is not Right advantage more of the

very go recognize level things. working these to we good the news those some it. about But we're but too to. things on Our it's that we because and further require higher back I future seeing working level with were looking we of some now iris we and could we and on, that tell. early that are that feeling coming a companies will of I the programs is wish what programs the at are of of is the see people And on the talk security security. have hopefully, in and talking and And companies are

Thomas Kahn

all the things or the I at Pat. you, exciting. probably thank doing, is and can that's company doing further it's EyeLock hope meeting either VOXX And annual someone Well, among what about from talk you because the most the of

Pat Lavelle

has our Yes, you, great next potential. that Thank on that we'll Tom. be meeting week. And for prepared

Operator

Crimson question [ph] with comes Drew Our next line Advisors. from Dillon of

line Your Mr. Dillon, is mute. may now you open. be on

Pat Lavelle

any there more questions? are Operator,

Operator

comes Partners. GX Chow of Tim Our Chan next the Investment question with [ph] from line

open. line is now Your

Unidentified Analyst

guys, Hey, good morning.

Pat Lavelle

Good Tim. morning,

Michael Stoehr

morning. Good

Unidentified Analyst

the question lower this And sales factors will in first continue? segment? audio international to is My which led premium

Pat Lavelle

affected based they retailers There down That is of within our the market with a coming the total to lot anticipate carrying situation World some normal curtailed a purchasing the have out hopefully, quarter. back that big of -- Christmas; position the inventory of of was that we that's that getting they throughout buying with carry. of towards the first And quarter. sold on We were German through. a going their the practices would the Germany see inventory in some second inventory Cup end to their on has them inventory pull

Unidentified Analyst

great. planning there My sheet. is balance That's you the as really do to just your wondering result. are Okay, I helpful. question in is strengthened really that guys anything a coming was you second have quarters if

Pat Lavelle

I In what operations we is on that the some are have, an that we always process. call of ongoing acquisitions, was that said potential obviously the the quarters, coming of divestures potential evaluating so

at have We that million also authorization shares for X.X an option. look We about repurchase.

board that We meeting next week. at our be will discussing

Unidentified Analyst

you. great. Okay, Thank

Pat Lavelle

You're welcome.

Operator

Our comes Investor. of the next from Williamson, line question Private David

is line now Your open.

David Williamson

EyeLock in EBITDA was What losses? the quarter adjusted the without you. the Thank

Michael Stoehr

[Indiscernible]

Pat Lavelle

[indiscernible] look to going are that… you at Mike,

Michael Stoehr

EyeLock the the but was million. loss, without EBITDA roughly now right of EBITDA negative attributable $X.X EyeLock is totally loss the for for Well, --

it. So $X.X to million you would add

David Williamson

Okay. a the future $X breakeven EyeLock Does around million that sales quarter? make in for the

Michael Stoehr

say… can't I

David Williamson

XXX%? it's If

Pat Lavelle

that yes, yes, would… Yes,

David Williamson

Okay.

Pat Lavelle

P&L and but and looking we exceed would burn. is things And EyeLock then with impact cash depreciation actual -- of more cost is is there parts interest That when offset expenses. $XX the two would the that, million our than like there are at

David Williamson

increase exited line is discussed be In division division, of was Top top automobile from EVO yearend. hot Okay. grow the calls, company. run EVO it previous to overall either the current does XXX million that Does replaced XXX? it other is it that the by that half about rate plus add of XX mean revenue the mean the wound will product that be the the so it seems product conference then and EVO, to line or we be existing sales auto down would about that auto XXX will or and XX, is XX kept of with and division

Pat Lavelle

that older be rear or already Well, includes understand you whether seat product. of business be to that entertainment, OEM have our part whether automotive okay, that our EVO at

currently So winning older we in will the case products and of EVO additional replace most of EVO, at okay. have the OEM, we that business, are

So percentage. expect our We're that greater flat see looking a would of you be portion I to grow OEM within business at sales approximately our aftermarket. the would

picture. So in where increase the total at that's automotive an we're looking

David Williamson

year-end? how many EVO on car And be would by models

Pat Lavelle

we're There's, looking models. I rest GM of when would car say around XX different XX launch at this we probably particular or point somewhere the vehicles, the

David Williamson

for Okay. investments is question $XX a know of is balance on ASA, on million $XX One sheet, to than there's basis separate the XX-K, the the million $XX ASA? the or equity original last investments, equity assets cost if line that totally the I million wanted for

Michael Stoehr

is equity A&A quarterly payments We quarter-to-date. But in small principle a it. company investment dividend there. out called from ASA. of a a Also, the Phantom there's in investment basis The in is on receive as

David Williamson

cost primarily basis million to million ASA? the original Okay, is the for $XX so $XX

Michael Stoehr

ASA money each taking But year. yes, basically, funds in we some as left No. the There's some we'll operated years. over math be

David Williamson

value. obviously, $XX because, I $X.X that million I was is at. balance year that, if mark-to-market the what to that's shouldn't portion was a is just Okay, with And million ASA $X $XX million million to wondering already on sheet doing getting be XX-PE

Michael Stoehr

the No, on investment of the balance as mark investment it the We its sheet. value market. carry don't to we

David Williamson

Okay, thank thank my you. were questions, Those you.

Michael Stoehr

you. Thank

Operator

with Goldberg Josh of line the GX. from comes question next Our

is now line Your open.

Josh Goldberg

Can me? guys. hear you morning, Good

Pat Lavelle

Josh. Yes,

Josh Goldberg

you are doing? How

Pat Lavelle

Good.

Josh Goldberg

quick to make just want that I pretty I few I a think but had sure. obvious, questions So, just

the was, end at count sure I checked the I number… to just make share have of quarter last the Your right

Pat Lavelle

million XX.X

Josh Goldberg

Okay. Is that a fully diluted number?

Michael Stoehr

Yes.

Josh Goldberg

Okay.

$XXX between of So million company for $XXX your the value and the is company? mark-to-cap million,

Pat Lavelle

Yes.

Josh Goldberg

fair? that Okay, is

Pat Lavelle

Yes.

Josh Goldberg

of debt, $XX on about so with share value? on million $XXX of million $XX.X cash sitting million you of $XX You're that of million per have cash

Pat Lavelle

Yes.

Josh Goldberg

right that Is number? a

Pat Lavelle

yes. close, You're

Josh Goldberg

Okay.

inventory. million a I books, say $XXX to inventory so cost, fair have You it much as filed but and XX-K well? of why is to believe question. equipment $XX.X have have get to And is as how to a million of property, sense was Love second plant, according of that's valuable your that you on recorded your

Michael Stoehr

Yes.

Josh Goldberg

Okay.

book value above your is So well the price current the stock? of

Pat Lavelle

Yes.

Josh Goldberg

some happens we Okay, A is to of with together? I hard you're how that maybe a for sometimes. which exciting just value What and know obviously to right or understand on of trying business? good And your me that a of ones things, covers, doing now. how us do generate are is about help pretty I'm could that unlock and from million others most or it's what a you glimpse are lines investors the really might this profitable have put understand guys people EyeLock really of are And talking $XXX not the able kind $XXX yours, well. of size NOLs you company million you underneath are growing to give revenue which fastest if income spotlight as

Pat Lavelle

will stock obviously think no primarily the I that that all future. we investment. is look the in I be that Look, there's authenticated biometric the from Yes. look by authentication EyeLock they our When at at are coming losses see, depressing question and biometrics thing is which the I price

are coming well companies future indicated secure. last where the still they bodes solution solution with is investment. as seeing I not What now, previously, the or back They internal iris We therefore have will facial biometric, that to seemed our the EyeLock as year. that are for had be to reality EyeLock most the most happening leave secure we're and we

we're cannot working our I but to, encourages have a continue us programs speak unfortunately out build program. to We to it of that number that EyeLock

see that's future. area an the So in growth where we

this rear business, that very seat of seen XX thought out, in seeing we supplier And in projects we're we that advent may working When in I like we're those talking volumes the may see it that a growth leading the iPads but aftermarket, level. or of based see the on, that the be the believe the that to, OEM with profitable look Many on reduction XX, would at XX our that not business. have have portion but be that or things at they're car. of we the customers or automotive big people XX, and could sales. we a do are Now our we and the that months entertainment

In see brining and interested into that. content fact, and to in we screens the car OEMs programs the own more own their more their utilizing and do more

that's anticipate. that we another area of So growth

Josh Goldberg

on happen be to basis to needs to What your company profitable a quarterly going forward?

Pat Lavelle

becoming EyeLock Simply profitable profitable. the would company entire make

Josh Goldberg

Give Okay. a million spending year that? $X more or you are take, than or it on

Pat Lavelle

what? On

Josh Goldberg

On EyeLock?

Pat Lavelle

yes, greater that indicated we that expenses EyeLock the As at -- our earlier, are than that.

Josh Goldberg

$X Greater than million a year?

Michael Stoehr

Yes.

You're in the $XX million range.

Josh Goldberg

$XX okay. million range,

Michael Stoehr

are financials in the EyeLock's XX-Q. way, By the

Josh Goldberg

Okay.

Michael Stoehr

see of a on EyeLock; balance goes sheet with you'll P&L. definition what the And

Josh Goldberg

do like first it the separate time EyeLock you that? Is that

Michael Stoehr

carried been acquired we since it. that it's No, way

Josh Goldberg

Okay.

talk being we company Can and high some a and well? it you're that little me the that In bit looking do at, little terms that of would getting a plant, so inventory the just of about you seem need of type to property, the equipment. that other things as smaller,

Pat Lavelle

premium as a in the months. we with have Well, to the we distribute. we line business for we've the overseas, cases and way Arkansas. look inventory in at a five our alone. audio Hope, we that's hand, that businesses we go-forward lead the in When to our six carry do much we in that many lead basis lot comes been in a times Not five is long manufacturing our therefore as because where And on time, product the on but traditionally plant from of business months have six a

our have OEM in business Orlando. We plant a for manufacturing

light both on reside In group whether depreciation Our facilities need for us in where we operations, not is would this Detroit. New least be accessory for we RCA depending And looked own that offices the engineering Indianapolis. do and the management past. add of are business we properties buildings shared the in down in going York, go, the at and will our Klipsch individual close segments and to have or get We've services and based way of success fact years. the or the facilities. we The we on assess particular the expensive the business over to over

Josh Goldberg

Got it.

so Thanks great. Okay, much.

Pat Lavelle

welcome. You're

Operator

Our [ph] of Street with line Isaac question from Capital next the Meyer [ph]. comes Bow

now Your is open. line

Unidentified Analyst

guys. good are you? How Hi, morning

Pat Lavelle

morning. Good

Unidentified Analyst

automotive on color regarding give I'm looking Can some the it than at that year's this last was fiscal. significantly automotive please? segment you XX-Q higher And is sales. me

Pat Lavelle

if our million which you're operation looking year, in of included Hirschmann Yes. last we Last August it divested the year. at last year for numbers from $XXX

Unidentified Analyst

with I paid And that cash assume Right. debt? you down most of

Pat Lavelle

of Yes. our for all German than remainder. that We some operation paid debt other small have outstanding our programs the have that we on buildings with we the and factoring mortgages down

Unidentified Analyst

And and transactions also? you year from see the down from went of this terms $XX.X in $XX.X sales $XX.X decrease the last then segment else do from Premium Audio you what Correct. you're million. million, The million from was from year

Pat Lavelle

Right.

Unidentified Analyst

same something for there's said, So the think is Premium what Audio it, attributable about but do you at that think the seasonality time decrease? like you there you is segment's

Pat Lavelle

to with the in the the Premium amount of our on on indicated top number Audio inventory, of over calls year, my excess programs past had segment, line listened you've last a promotional I statement, year, if As revenue. generate

that and profit cut eliminate the and doing sales, as exactly certain will basis percentage that forms needed $X to approximately distribution, protect And down were went pull what call, that's we we sales last XXX we of However, indicated our to for as so. down million margins margins we decision. that that but of decision such would our the while some made customers. on over points. through make on expect increase had, I of was the up We we had back year gross And happened, some the distribution we

Unidentified Analyst

Right.

So point are same your sales, up go moving your especially don't time your but decent, basis margins that at in increased just are SG&A to on you going forward… think expenses the

Pat Lavelle

fees, pickup you'll pay lower had ship, more you overhead to we space, go at focus you'll bottom have warehouse down group. looked the we of and gross as overhead. within but a that Yes, significantly. our we with that's looked you you if Audio But profit to on line pertain professional Premium the higher expenses Audio part our commissions sales No, profit, expenses lower Premium when you came generate was anticipated Obviously it at forward. have our lower you if they in due if they

Unidentified Analyst

Right, so will continue increase, come the… SG&A you your moving especially forward to of as

Pat Lavelle

see a more And promotional Premium think half in we when bit Audio you'll our of out flatten at to the little little see revenue first big quarter. year. think in than the because bit you first had sales the we've start I sector a a of you'll the flattening look some out revenue seen the I more

Unidentified Analyst

you said one stuff? your of Ford then one was Okay. that last And of question, just new the buyers

Pat Lavelle

the Ford have Lincoln Yes, seat and Play rear Play the systems we of entertainment.

Unidentified Analyst

And what any? percentage the went of F-XXX, if those to

Pat Lavelle

None.

Unidentified Analyst

year-over-year. Okay. And with Subaru, significantly they increasing happen sales be to

Pat Lavelle

Yes.

Unidentified Analyst

Is like there attempt to aspect selling to cars the any drive the to Subaru? your promotional sales better

Pat Lavelle

expect And with combination of success to we new is some on year. statement programs that's which is indicated generate sales the with increased remote new with start had my have and a Subaru What having. programs sales increase the Subaru in will overall that for an that Subaru, I

Unidentified Analyst

much. Okay, very thank you

Pat Lavelle

You are welcome.

Operator

of James from comes with Our Co. next line & Cowen Medvedeff question

is line now open. Your

James Medvedeff

I check reductions, are my this and follow-up Hi, want the I sure expense already by these That year-over-year not that and thanks excluding taking make call. just impacted comps follow-up are to for Hirschmann. year-over-year Hirschmann? -- question, just double

Pat Lavelle

expecting we Yes. $XX on be What after by last overhead lower was our Hirschmann. to are million our indicated I would that call

Michael Stoehr

Right.

you understand year numbers. have last to Just XX-Q in not the comparative does Hirschmann see the that

James Medvedeff

Well, yes, thanks. Okay.

the that question I should wondering on It how for I think the we -- the light for And that kind is quarter. other in while? about have next of am CapEx. was The

Michael Stoehr

The CapEx the only we et thing engineering for go cetera. facilities our that acquiring as will facilities impact we look year, other any if is at forward

of biggest now As stuff. CapEx, CapEx programs that type distribution user see Hirschmann was you computer of statement, consolidated with the is the of and off a more

Pat Lavelle

thing happen impact CapEx the And year. may anything end and that the of if towards it the probably would only

of right of we back the that some some manufacturers able our of tariffs. manufacturing are about we do talk the we the I tariffs, any now surprised if We are where got Orlando. to work manufacturing that would back some tariff to through we continues am become were we But move we will facility a the be production to first our having in higher move tranche to certain it were move situation questions Taiwanese, then I in with Asia able would be it. and without on haven't board Taiwan to to of impact the problem, to

classification to were valued based them product the there. able and like possibly that will approved be depending customs. this are to different were to move anticipate of then the in some And basically by have remotes you and hit able individual to we will has gotten around we manufacturing on Some some the continues, on manufacturing have products States, were cables which product. the And a see been situation ones on move we then lower back re-class expense. CapEx a that The get But we we which things if problem. you parts quite Asia the don't see United us will tariffs

James Medvedeff

That's actually how in expense and has impact and raises levels? helpful it sort question. really might another the or stuff of future it How how Great. might that

Pat Lavelle

repeat you am I Can that? sorry.

Michael Stoehr

little It came a garbled.

James Medvedeff

all of Expense that, that moving sort you've -- about impact And production expenses? what move that expense around, be by might it done? at more the levels, production already on lot a they if are to out sorry have in turns impacted

Pat Lavelle

our Having our in decide we already of manufacturing to that have plant, were it's going to are our it plant Really of to unless the that going -- product. much in many producing expense partners move from of not some they do facilities. cases, we one ourselves

of move Taiwanese in. Chinese They say Let's the just and in it newer will products plant in plant. some

that inventory have of We we have in least on our XX days warehouses at hand.

the gives to it move. time So them

We going much not there. have expenses an impact to in of are

James Medvedeff

thanks. Okay,

Pat Lavelle

You're welcome.

Operator

Landry with Our comes BMO Eric Capital. next question from

open. now is line Your

Eric Landry

couple Great, thanks. I have follow-ups. of just a

quarter to answer I out. going down flatten than think second in weird? was a will you be XX%? mentioned that Is to question less So prior Does revenues that mean

Pat Lavelle

premium to. space our was Within referring I what is

Eric Landry

I got you.

Okay, thanks.

Pat Lavelle

welcome. are You

Eric Landry

And profitability? you've high then got the a lack wondering balance what when continuing logic of cash a I lastly, of factoring just program such am the and is

Pat Lavelle

that program. the away go within the factoring will that next months anticipate We few

Michael Stoehr

Best Buy. to XX And basis go, would get us factoring U.S. the it of back money things trying it, get points go we $XXX,XXX. into And let No, the you the the be days. $XX XX money, factor on, to is program million put it as a in Wal-Mart of with and costs very high course --

Pat Lavelle

that time. one in and domestically programs of we move we'll months' Europe two one and in are we one have; in a The probably one The out States, United Wal-Mart. Buy few Best will maintain. There with Europe within the that

Eric Landry

low one in United the cost? And the relatively in States

Michael Stoehr

That's correct.

Pat Lavelle

Yes.

Michael Stoehr

borrowing their get You rate.

Eric Landry

my answering for Thanks great. Okay, questions.

Pat Lavelle

You're welcome.

Operator

comes Our next Brothers. Kahn with from Thomas Kahn question

now line is Your open.

Thomas Kahn

it I don't it in whatever because was? everybody the company, after big a a anything Barcelona Just use chip. And said, going hell positive." and as follow-up. Eight In This was -- going And Barcelona their Qualcomm heard know company. haven't EyeLock Qualcomm words got really where classic we it. Everyone about more was ago, were in a I a months you when guess to very was. is excited on "Jeez, that's other is

Pat Lavelle

Year ago.

Thomas Kahn

A year ago.

what's VOXX, what's with with us be is on to EyeLock Qualcomm Is meeting, Qualcomm. going will got happening would someone enough very have going you by. useful? nothing on tell on So phone either from Everybody could There who the silent. dead? be is EyeLock at annual one or in with that and gone general we've year kind the someone it Maybe from

Pat Lavelle

hear you. I

on their we Qualcomm our with and develop calls, we a still As indicated XXX to our technology to XXX chip. on have program

Thomas Kahn

year more… We thing little into more we a and we're need Pat, need a this little But a color.

Pat Lavelle

give will I it right. to Tom, all

Thomas Kahn

me. Pardon

Pat Lavelle

company starting around when pause realize And we facial security. that company not the XD as in to a would pause does to see give a certain be the or business start realize in to turn start that was facial. people sufficient it whether introduced business There and XD

beyond and things we're dealing… So, are are things but our these control, are these that happen that

Thomas Kahn

up, dialog we no nobody Pat, kind the conversation anyone. of about juiced if big Hi, will, us be on, over later am about in what's are is that. a that us. is and got that's are because understand you the would kind of suggesting and we dialog that got meeting. kind of on giving What's they up. big Qualcomm All appropriate about on I future color year company is go here name to a talking to going all criticizing of at what revved everyone that the we you going a Qualcomm and and going because are people discuss kind what's annual even to with there now And

company's So a we lot with communicate got And of people on. "Well, say say, it the going to what's shareholders." to

Pat Lavelle

can different point, I are on all All at working we I particular say free am companies. this the not discuss with things to different

place. in we and on the NDAs have cannot we because have chip. Qualcomm technology into iris is these some of on the of NDAs with the discuss XXX application are continuing that issues signed. I We I All can to XXX expound the of work

Thomas Kahn

we that of thing But it's was in to Not exciting and a going that to of part this certainly the Qualcomm business. respectfully We else. you subject is exciting any Pat, greatest yadi-yadi-ya, most thought to were It's on, agreements. figure the and communicate awhile. I then EyeLock the But what the what's the out on is nondisclosure be tell you ought I talk milk. your certainly I And us with business. able to don't probably request juiced our feel is requirements be up. of to disclose the cliché has me don't your confidential. to you want way another speaker want part you of EyeLock owners been booth people us way because somebody figure Barcelona, of to bounds going within just And would file out anything Everyone since the which with this to more future too most mother's that got With because legal whole compete potentially our with nothing. a

So, little I give on going owners ask meeting could the out what's way lowly please. much if figure at annual more on to color you very a

Pat Lavelle

it. look at a Okay, take will we

Thomas Kahn

you. Thank

Pat Lavelle

Welcome.

Operator

of line Jen the [ph], from Matthew Private comes question next Our Investor.

open. now is line Your

Unidentified Analyst

cameras, a body about -- small the really Hi, your small part cams. is really of a guys. which I business have the question probably

us So in think guess it wonder an if update about I you And going on just you that were year. excited what's could guys I I give last space?

Pat Lavelle

now Right streaming. XG of the to ability that development has cam in we're live do body a

think I We I that. that developing product. are the would see the we in process that's the next is particular expect would eight will are where with cams that And pretty camera which of we months are say much nine body going. a within of where future to we

Unidentified Analyst

any your safety public And update the penetration into Okay. on market?

Pat Lavelle

be police of market taking different are penetration the municipalities, different different have work they be work market. working number already, a the with And will companies with product will agencies. into ones that with the into the We that

Unidentified Analyst

you, guys. Thank Okay.

Pat Lavelle

You're welcome.

Operator

session. closing like question-and-answer today's concludes to Mr. remarks. I would to the back for that Lavelle turn And call

Pat Lavelle

all a Well, Okay. good most your of hope us for I all thank this answer I day. questions. morning. joining wish you we you able were to And

Operator

program. today's in Ladies and concludes gentlemen, the conference. your thank you participation for This

a Everyone may You disconnect. now great day. have

Glenn Wiener	IR
Pat Lavelle	President and CEO
Michael Stoehr	SVP and CFO
John Shalam	Chairman of the Board
James Medvedeff	Cowen and Company
Eric Landry	BML Capital
Thomas Kahn	Kahn Brothers
David Williamson	Private Investor
Josh Goldberg	G2 Investment Partners

VOXX International (VOXX) 11 Jul 182019 Q1 Earnings call transcript