VOXX - Earnings call transcript Q2 2022 | VOXX International Corporation

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Operator

00:03 Good day and thank you for standing by, welcome to the VOXX International Fiscal twenty twenty two Second Quarter Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation there will a question-and-answer session. [Operator Instructions]. 00:36 I would now like to turn the conference over to your speaker today Glenn Wiener.

Glenn Wiener

you. Thank XX:XX welcome two and International’s fiscal fiscal Good quarter to conference twenty second call. twenty morning, VOXX A press SEC. release and was issued yesterday after our XX-Q we the Form with the filed market closed Investor Both be and updated presentation documents investor of be later. found the an posted can will our Relations in website, section from have and and Chief Officer. Lavelle, Chief Senior Executive we will Pat Stoehr, President Today, Officer; Vice prepared remarks President and Michael Financial will open up the questions. for we call which, After historical to would XX:XX information. herein, everyone are remind information I for call that contained made expect webcast based like constitute today's on would available statements that statements on and currently forward-looking which The company Form XX-K detailed the and you statements, to in period assumes forward-looking for point eight, twenty ended responsibility business, no to one. the any associated twenty are such would factors twenty like update our I risk February to our with investors and period. December Also hosting one-on-one will Conference XX:XX management note, with on the presenting at Investor nine, and Sidoti throughout the two eight be meetings day

XX:XX your we to and investors to our Pat? We are have accordingly. with follow. all Lavelle. and call the over for the like present to turn year, will is you now continued update Capital thank Imperial are VOXX details more to December the There pleasure Conference calendar at support on events the Security remainder fourteen we I'd evaluating of also other it registered my to to Pat

Patrick Lavelle

everyone. and In quarter, we morning, of performance. Glenn, quite this you, our I'm good Thank with X:XX past light experienced pleased what

a falls. the has worst increases increase instituted increases short The all container year. chain wave was considering that to the taken have we the what that of effect supply prices, in in second we job rapid September. all worldwide and consider especially encountered The done second of economic price due of price the quarter instituted the initial navigating the good XX:XX we’ve of believe through you over If a we past the VOXX team events, turmoil one-time

inventory We have hand our the in to deliver quarter. on third all-important

added in news margins, expect supply good Gross chain were our that, and the of increase delays. added were as of We suppliers new and have be percent warehousing. which chips. Higher percent a expected this six costs turns, And the a longer some two ahead. missing furloughed more through give measures how ordering year-over-year. due calendar segment primarily and impact employees months the manage to we with out fiscal up will inventory quarters are less In to availability. lead or corresponding one. Revenues accomplished in was our of business operating still addition, expenses forty continued we the And protocols increase consumer flexibility by pressure, six shipping months impacted employee XX:XX component of year. of an associated electronics back first boards almost were all in QX freight salaries. there XX:XX to in will the compared believe modified The and these in our to alternative to twenty brought costs the alternative in grew while we and utilize were even in twelve we coming us terms this months primarily combined We DEI twenty full to compensate times due for changed despite is few the

of seven transactions. an diligence for of we six non-recurring, twenty dollars waiting OEM larger had to especially into We four million with inventory three professional and nine six the million better our account and Onkyo eight one, thousand. actually improvement and four and two, which we expenses, month and period for million point to extra XX:XX fiscal of EBITDA than seven reported first twenty half programs year, expenses we of versus consider GalvanEyes operating professional Taking dollars dollars added ten million hundred expenses versus some NRE the and On of one fees performed half point added support adjusted fees, point Asia point in and twenty the for point twenty basis, hold million. in nine an five labor the fourteen shipment. in roughly For our last increase associated point three of warehouses loss the fiscal dollars non-recurring twenty operating two and dollars XX:XX first million one-time two in higher dollars also new million an of had point income operations twenty with

anticipate ahead, a of little growth the under year. with the in we QX second above QX half year Looking and continued prior the

dollars We prior tech related dollars support as and to year-over-year to growth both be from quarters fund expect of primarily to and the profitable million in to an see approximately year million which to variance relates fiscal nine in lot five increase is add nearly comments, year this an I of engineering at momentum in the expect there we team. with of the year closing progress, my needless a Onkyo’s is but to addition VOXX. comments respect say, engineering will XX:XX next of some to

in our second percent For percent Electronics of aftermarket the business seven the our grew was comparisons, added with thirty Automotive up the quarter Our second DEI segment half from are subsidiary. through by contribution up four the quarter the seventy revenues first percent XX:XX year. forty and

customers will be programs And volume fifty starting and business fourth quarter, entertainment forward revenue. increase three ramp-up which added in of OEM quarter due began have both Nissan rear-seat percent the Stellantis, Our to new up which we top-line boost to in past was production. should this with as and

not products. customers well. our environment saw The our revenue impacted delays, XX:XX past in mind, shortages For one this a car manufactured achieved was worsened seventy segment seven percent aftermarket up of and automotive due and revenue also to number which the parts. lack over dealers, automotive security quarter by aftermarket approximately plans safety significant OEM on increases month a our of and placed growth with only percent in despite comparisons, as all six percent. We OEM up seventy grew this with shutting eighty but of strain the Keep

in quarter this grew we electronics Premium two by We as XX:XX Our are approximately production delays. year, eight consumer were segment of over related two shortage, the date. sales, This impacted continued also in closures percent offset expect which percent grew ten almost move in by months, second percent And percent business led online. declines CE through more six to the next sales Europe. and quarter the product comes into premium normalize CE twenty forty approximately year to first the turn to and capacity to declines expect store growing to and in there audio but product sales, still and chip and this a which sales continue. product product we majority in other XX:XX audio second inventory

During had wireless increases premium higher and computer in the and of quarter, we audio in premium Europe. wireless speakers sales sales of speakers

comparing point six company month period, we the dollars grew virtually saw point eleven seven dollars period. when second the in XX million categories. the seventeen increase For in of quarter six month and trading sales audio million all a four premium XX:XX

begin investments issues, to profits. meaningful for now A/V Fire year closed this and of ramps are supply We other increases biometric Amazon's our to automotive been due production LIMBO year by segment Even customer, the based things fiscal smaller only Nissan to what growth of start to acquisition And have a great Home performed our this, told awarded. next should we future we're projects global on stabilize, as chain quarter, this profitability. comparisons, should with quite revenue you This optimism Stellantis bottom awards our our we constraints Onkyo's quarter the environment. year and on anticipated improve new we TV made customers for and remained and layering our to to two still technology a as been lastly, because the XX:XX the to delayed increase Ford. growth September, outlook been additions capacity expecting the to our we relatively soon have not As years, twenty. well month and to have began the top on supply contributions family line cut the more I'd With issues the the are more but next given as prospects. back distribution will core. seven from over on to of of and bullish we segment the new we we most on well twenty quarters. up chain of conversations OEMs we GalvanEyes OE our aware, has bodes XX:XX and our that we Overall, begin up the in begin behind believe come incremental past we to brands been and of third part without see to the sales shipping resumed agreement, for like and by coming anyone. the of several our post products but life we This on flat this twenty improve. have XX:XX XX:XX Based business customers, in offer holds realize to Entertainment content than are quarter, past can clear six the the company, have incremental and I've percent We're additional healthcare was losses positioned and promise compared which and be we for other transaction with have delivering lot terms will been in for leader Based is and contracts smaller good This over expertise. gradually which double the momentum, period. VOXX scenes awarded, to our is shift which business of both added fiscal is to

year. VDI and to audio have acquired we Our acquisition the in and a with do the Onkyo that. approximately addition driver continues strong million outlook categories don't and VSM position in little fiscal channels. any bit provided well call that my is since with in and this XX:XX product a grown sales that of growth categories. shipping last not doing should very solidifies intensify we we new OEM indicated we should on than puts licensing security be agreement automotive changed. that XX:XX our better and has us them issues, Pioneer. additional do several will has new new dollars And fifty Premium I

dollars. focus we rebuild to And XX:XX year. on as dollars production America, million over As believe with in we expect we five distribution twenty expand next one hundred we can North fiscal over ramp-up reach million initially and a for and we two sales exceed hundred globally,

now gross we see are XX TC well. as operations owners, we expect the at As improve to our margins

With audio direction increases, the fourth more third offer XX:XX our bottom-line. but a anticipated all is significant for don't premium revenue given like guidance, some and we'd be normally transpired products, XX margin to that Now, we provide should historical line with the quarters. has in to contributor TC

fiscal XX:XX outlook Fiscal expect sales modestly to and customer six to Our we more dollars projections to in fifty in with twenty come the around based third we done believe six and our half with year feel periods. we any statements. sales second below events twenty comfortable higher date. year fourth have be prior and is barring double actions quarter three. up quarter what the should the to to based twenty be two on stable We by the and margins following in dollars unforeseen of million digits date Gross the potentially million the twenty forty on XX:XX above

second with have that, Onkyo’s Expenses associated furloughs, programs and costs the We XX:XX next will reductions salary we were over profitability for greater associated And over I'll the have more and one reporting I gross as and expenses next to half third as last the are in be million with comparable move turn back three few to accomplished expected and nine Selling fiscal set XX:XX twenty don't to last and in with higher the We levels normalized sales in-line in million mostly expected Onkyo. detail. for had year, the in profit fiscal on G&A in expenses dollars expect year. be we into a for sights half base startup our to and billion to the XX:XX for essentially half, expect year's Total dollars will be numbers first operations dollars on the Mike XX:XX Based positioned the operating of expenses what professional we year. of incur contributions we additional twenty year level reductions and quarter. the we’ve DEI. eight with will second years. addition exceeding the expenses fiscal prior further of be the fees are higher with we've Mike? OEM that beyond, this to related company call believe

Michael Stoehr

Pat. I'm of provide of drivers you, half Good than OEM and going more As the Pat on comparable clarity for to businesses the of to six background non on aftermarket everyone. up XX:XX in the of sales month and breakout both the additional year. first revenues month comparisons, periods, date as was significantly and six our through for half Thank results this for year. expenses. and the the non-recurring XX:XX our some all and noted, first Rather believe expense walk morning, year three routine will I provide the

added the continue. both cinema half operations for was and formed our in as sound OEM drivers passive but and products as headphones audio speakers. point sales of growth, seven our year. were radio the we CE up with categories. German rear- entertainment the in XX:XX XX:XX Premium program [Armada] we security the fulfillment of increases production video down vehicle the it expect QXAD, Satellite strong seat categories. some were shortages from had approximately We sales second some TC mobility up XX in year. telematics sales increases for receiver started modest TV up and And and and to from and sales increases categories subwoofer million start product product aftermarket, issues this we increase. XX:XX the in in volumes curtailed make months subsidiary, Stellantis production lifted. seventeen we were side, were due chain the launch Ford. from bars In discussed, to programs the certainly were limited and the is in the Component Nissan several growth, key of restrictions from dollars saw anticipated several growth to curtailed higher last XX:XX supply audio and of in as traditional EVOLVE The this Our for and subsidiary and computer the many as DEI expected Amazon's we with premium On several new new as sales Fire of products COVID-nineteen of higher

the in six for two the six business Asia, point the drove freight sixteen gross for dollars with majority higher audio. the for COVID approximately lower to estimate result dollars. over margins, two our salary two there roughly related We expenses and dollars had covered DEI almost seven non-routine QX gross were QX the year. to last in gross that lockdown a expenses our non-reimbursed to quarter warehouses during through increases and labor Keep were As two million one there back example, nature. second them four furloughed to new and lower this in million dollars period. month others profit employees twenty point in one gross We imposed earlier. mind, dollars Pat than in we've had we million additional million the that approximately And rest e-commerce OEM costs year the additional in year a cost expenses program. ten NRE tied three million of the one higher compatible million expenses for XX:XX at dollars related of impact point taken bonus for throughout steps month related is believe we the fiscal XX:XX professional expenses which lower of segment point two of were fuel increase And twenty had our the dollar four was one also several two reduction higher non-recurring The six and and fiscal margins three expenses, and for by one. year. margins million twenty the approximately one increase year, one transactions. related million of in dollars as in commissions, to prior as the Similarly COVID we twenty twenty came we twenty cost fiscal dollars year, and implemented had outside and dollars basis CE to cover point doing The quarter, the XX:XX came bulk and Taking point sales, we of the own Regarding fees other period. were points last talked Of account, last dollars fiscal non-recurring. of that the increased advertising was eight added of additional overhead price months supply versus and the restrictions quarter full million estimate of and point five in came related R&D. in premium We issues, for web margins periods, QX to seventy basis of points into considered that as increases year increase chain sixty all point

professional with month the four million The calculations. by total million approximately comparable point four months that increased for considered point operating six point dollars point periods, are eight point XX:XX adjusted million recurring. in to million to owning dollars versus have however, four dollars, did, two; the DEI, five them fees legal six dollars expenses non- three nineteen is comparable. relates dollars impact for six second remainder fees; engineering acquisition comparable Of We supply dollars one chain quarter non-routine turmoil. and reductions; million seven month dollars grew taken costs salary EBITDA million is five and is nicely outside four a across furloughed expenses. two Note for this, tech the six margins. our We for impact and mixed dealing the three million and account five point for was NRE gross for the is big million employees on point SG&A our the is bonus and and dollars and labor; For

as we Some for much twenty to made strategic point two, well us, the of dollars stabilization expect future. the in magnitude of this point had added increases months some in is twenty are new not as our though R&D, steps Onkyo We third up We was of as need which this Pat three GalvanEyes will is we six hopefully, professional that positioned ensure which we more up four level behind point the attributable of income XX:XX to and in when three we nine one of of with increase down on half aggressively transactions just of million fees we five programs this believe don't offset wave difference. -- market. dollars. the the spoke procuring second million XX:XX of first the dollars, the given we in and year. the That VOXX be NRE in of Through expenses professional a aggressively were EBITDA year. decision for adjusted price we XX:XX second expecting automotive fees can the half is operating fiscal costs we're and we as up million Net were income we quarter, XX:XX than the and what the took of the inventory more volume fourth hand second and given can is added awarded awards have and been the investments and

four VOXX can issuance dollars point the one term dollars cost million capital nine was of eight XX:XX remarks. one February of to Onkyo's our access have the note, year-end. two that into concludes of million XX:XX and satisfied to thirty fifty and to as XX:XX point August of transaction our positively -- million The of and the which the February form mortgage, working Germany as twenty eight. and million fund continue this million point twenty of cash call Our returns. usage one on as of funded year-end my one in usage and We part equivalents paid the as thirty seven only point compared was was the relates questions. twenty periods As strategic August August quarter balance on to Operator, of of three to Florida in eighteen one, dollars for as five the ready from impact Onkyo August to debt to one. off remainder general and to fiscal our We and The seven The nine of cash pursue dollars of for transaction is open debt one eight we twenty dollars twenty remainder twenty as close for thirty cash eight. related September, since had sheet. a compared operations at the net one remainder as to roughly our loan twenty to cash million this stood as generate compared May quarter. up year increase capital one (ph) Cash stood of million twenty general [Euro] we transaction million million XX:XX is account point dollars dollars the come hundred the And Total ramping normal be nine twenty eight we acquisitions, debt debt and eight respectively. for ended seven decline twenty point one six debt inventory XX:XX purchased one of one. third thirty cash invest one typically Our is dollars six our and compared million of thirty long million seven point in business to the total Moving forty outlays fourth at growth, of of twenty season. as levels thirty dollars is as twenty an twenty point seven May thousand to expected for related eight February one more six U.S. point we million XX:XX end dollars which do – selling at only our quarter. one seven as That will largest thirty we're our dollars point to back takes to purposes.

Operator

XX:XX from Forte [Operator Tom comes Instructions] from D.A. Your the line first Davidson. question of

open. is line Your

Tom Forte

congrats XX:XX incredibly Great. Well, on environment first off, navigating Pat, well. challenging an very

Patrick Lavelle

Tom. you, Thank XX:XX

Tom Forte

the you a optimistic what level had about with sounds statement, last would Pat, to with versus are agree if is, more your do for [indiscernible] this the handful you high business three you the A, statement? quarter XX:XX reasons that agree that And quarter. increased optimism?

Patrick Lavelle

XX:XX Well, I the what I is mean, we that the transaction, positive. at closed when we mean, Onkyo very look We on GalvanEyes. transpired, close did on

our started have We the Ford on. shipping OEM have we additional programs, coming

see us issues, the cars abate dealers is will can believe dealerships at and supply country. give somewhat. will that gives great chip we the next issues higher this have. another immediate. will And us year, will demand a we're positive and Onkyo of that that XX:XX order that business. demand for then in more we move Pioneer to and existing in make optimism car of into look seeing be globally supply to strong. And It's the manufacturers, as they across automotive we for next that it that we very as to adding have. is year we sitting Sharp And the production going factory That's start layering we shortage the deal not that lot But be So, into business a the business abate sure very

all positive. looks So, very it

Tom Forte

your first my at off, what congrats opportunities? on is, Onkyo And as other level M&A far seeing you Is then thoughts question pricing? on a you're as high than deal. current Great. XX:XX give Can

Patrick Lavelle

strategy be off I we the we on There's Well, have there eyes acquisitions work VOXX that a they we've like the think of sure desire I solid that number But is a rush or this two. of year want point. we would of with that acquirer companies close billion that XX:XX team layer make to achieved, no at our we're we've all OEM capable new sure to had some is on new is the Awards, pull on everything acquisition strategic one Onkyo two dollars one about business in And dollars going an million have we nine of of strategy sell. we to we've hundred there. us business That that sales million us up of to hundred the preliminary between forward, part to our one or make year our our would million thinking obviously company hundred are cases entire to get then fifty fifty couple this done in if brings and get and that and would the mean, a digesting layering conversations were XX:XX in now. there. dollars to that on top that dollars

the So that's strategy. definitely part of

acquisitions in I been As again. that to be cost, some sure will diligent be we've we and prices, at think shows that strong far able able do to do very that do very, as very the I competitive making we not overpay, we'll think our history

Tom Forte

you questions. Thank Thank Great. my Pat. XX:XX for taking

Patrick Lavelle

Thank Tom. you, XX:XX

Operator

is your next XX:XX Dennis] comes line the Your of [Stephen open. (ph) question line from

Unidentified Analyst

a quite stock the I’m I XX:XX calls for quite your I've got for been while. like I while. a a couple private of have a And questions investor.

being say, growth statement in the in What a the expect second half report, of up that’s that come make are You and used year, you we numbers relate does the quarterly fifteen continue year. that? up to the to full to What with percent fiscal be to? for

Patrick Lavelle

in and we're what using believe to we to type fourth the able that and that achieve achieve scheduled to for the speak, that that in we that have half are be between placing second we result. promotion which able our third so quarters have able what will will customers be third deliver we're box, we make if of we the projections we in our the the have The quarter XX:XX have that we quarter to coming for orders, that from the numbers sure we are second half,

Unidentified Analyst

XX:XX any on So, projection? it's actually not based it's a just concrete numbers,

Patrick Lavelle

XX:XX Yes.

Unidentified Analyst

XX:XX Not per-quarter. on earnings based

Okay.

company have seems the Kahli, earnings at repurchase me buyback. stock mentioned -- of other Kahli couple question bought million to public quarterly the over couple going the four Mr. shares? last company of is, shares. to in reports, any through Mr. That is be that knowledge has the The the company's on least based buying appears last I It you’ve to be

Patrick Lavelle

quarter. the the XX:XX bought First one million shares about over off company past two

Unidentified Analyst

XX:XX Okay.

Patrick Lavelle

holdings or in over, believe, second period. the in third in I XX:XX Mr. year quarter. Kahli’s require not almost acquired quarter two They were the

Unidentified Analyst

products. XX:XX Okay. just Sarasota in constantly I'll both your I that and your in All the one really thing -- have Costco Florida, of right. [indiscernible] live

Patrick Lavelle

Yes. XX:XX

Unidentified Analyst

They're always always XX:XX there. It's well displayed.

Patrick Lavelle

quarter asked whereas And things the right we past the XX:XX and business over with for sustainable. sustaining is a were season. One of with the it Costco big holiday going program the is, adding, us now program with the have that Costco

So, will very account a that Costco become have continue. and strong

Unidentified Analyst

comment chain [indiscernible], our My is Costco the is product but supply chain time. in that, all everyday -- supply XX:XX

Patrick Lavelle

goods make in the right be boats Asia additional with delays the to capacity XX:XX were We've sure we had warehousing full inventory. be to going we but getting the everything, and early all going third sure I worked quarter. make that proven the in out that's second on of part strategy to hard hold take production very because stepped the unfortunately on quarter the the and at of to We facilities to to the into on had them think firing

Unidentified Analyst

XX:XX so. Okay. Hope

Patrick Lavelle

Thanks, Steven. XX:XX

Unidentified Analyst

XX:XX Thank you.

Operator

at like to Patrick XX:XX I’m this turn now back I to would the Lavelle. questions conference no further showing time.

Patrick Lavelle

issues through team and VOXX. not it's I back has has exceptionally challenging. last I Once earlier, logistic support all just has said work we've it to But well the performed now this very remotely over as and VOXX and that had. you. coming working the believe two very, been the past for years, year been you It thank Well, again, thank XX:XX of

we're on and you strong thank So that we be I good a you note. to finish a to will want the able anticipating year day. wish all

Operator

XX:XX This call. you concludes Thank today's conference participating. for

may You now disconnect.

VOXX International (VOXX) 13 Oct 212022 Q2 Earnings call transcript