VOXX - Earnings call transcript Q4 2022 | VOXX International Corporation

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Operator

Good day, and thank you for standing by and welcome to the VOXX International Fiscal 2022 Fourth Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. to please conference go like today, to now Wiener, Glenn ahead. will hand over the speaker I

Glenn Wiener

Good morning we Executive to investor as An currently statements, no and call week. Today, on and Relations fourth everyone XX-K update quarter forward-looking section remind and that would except welcome webcast made issued any responsibility statements Officer, I’d presentation and based I Lavelle documents to we that call will forward-looking questions-and-answers XX-K point historical and to remarks XX, Vice the support the prepared Senior VOXX Pat you available associated statements Company year and Form factors our period today’s over which and it's Chief will after website for in such open assumes contained information. VOXX conference Financial constitute to The are well. herein, of this now have will like International's President up to can for from information President like are for to available would end of our and is the Chairman be be in Pat. ended to risk business, for call. May the thank like turn XXXX. the detailed today continued I'd with on later you Shalam, press with to for your our pleasure my Officer updated we Yesterday, Chief and our filled found Stoehr Form and our Michael call posted release fiscal and Investor John XXXX www.voxxintl.com. us questions. which at

Pat Lavelle

upcoming year-end performed a of start and I'm and they morning, team how year. focus of and the quite many that and during good reported on comments million. Despite on full a revenue impacted we control Thanks, XX%, our I'll was today of proud our adjusted VOXX quarter and this, performance then to almost the and up fourth Glenn year-over-year with everyone. few of issues that of our beyond grew turbulence close XX key EBITDA economic and customers. segments all year

OEM our many to to During had acquired customers. subsidiary. and and Automotive, awards to been we Automotive we JV of Integra We on needs. agreement higher We Thanks of the Corporation. added with These We near-term opened a have many have chain electronics, first continue continue shortages decades long an positive in And new Sharp with where and relationships with meet able we the brands secure new formed product in to the impact establish received expanded and in customer's part new the through our and the distribution distribution to and at Safety. through obstacle Security international multi-year directive suppliers, Onkyo full-year growth our remains TC owning XX the year, fiscal with Chip licensing Pioneer. we avenues production profitability agreements win year number two our one developments I since continue to portfolio and for end. our up our extended inventory supply manage and in will awards new believe issues for have future. OEM our our OEM brands leadership

will additional distribution. We our times and customer higher lead to shipment. carry procurement a enables us have volume minimal of inventory increased for base require with inventory This in our and serve better but to allow

for continues companies. will and disrupt many chassis the overall ports if the shutdowns COVID the has container a situation concern. And at improved, in are supply Although China this

these who it. to negotiate customers price actions and the to increases our with fourth have closely this are quarter, believe improved We structure ahead in going finally, forward. our higher continue watching And of get we margin costs offset

million. EBITDA at segment As consumer for were was was XXX Australia. the increase expenses adjusted million and with Gross by Audio million due basis and margins gross reported in fourth income operating Onkyo X.X in we Premium the And improved to The the resulting modestly, higher as ramp profitable comparisons, of with margins get to continue $X.X points revenue operating up Klipsch, should up establishment primarily We $X.X of revenue improved. driving of was profitability. acquisition total growth. quarter up production and stronger the Onkyo

said, segment and delivery and declined of primarily by down OEM Chip missing continues basis the all that to targets. million points, shortages again increased to cost vehicle customers Revenue impacted was margins of Automotive our XXX component to our $X.X due led components. by As for be production, gross

negotiate continue component to customers be to some higher our if we pricing revise to new with costs. shipping And not We forced review orders. and reflect may to successful,

over all launch challenges will these next new our grow of into on Although years. will that we exist to awards moving based XXXX, Automotive few the the business expect

will be row year manufacturers for the demand. an demand kept vehicles be will new me this even with high. have to that economic this Additionally, indication car downturn in very And is third that up a not in an

So, staying the jump and Automotive. into let me with segments

be Service's to XX,XXX over XX,XXX a of to award potential a to working Defense and start the this program. fiscal XXXX Kosh new speakers, revenue over begin vehicles the to $XX be four fiscal developed could value. electronic be slated for which of total increase sensors third next vehicles. tilt Noisemakers first other I estimated vehicles, value and to five the pleased first quarter During vehicles. related years with will Automotive delivery projects million. from to in for quarter, initial to camera for The on of will Postal program is realized multi-year also $XXX the their US production am newly approximately generation grow used million VOXX We're this system year contract. Osh a to the lifetime providing announce new over that Mass is our in fleet be next with XXX,XXX to the vehicles expected Osh will Kosh and in-vehicle

place Tv expected in and for on are items. Nissan these the and for call are contracts firm no due car program in our coming EVO stated in less with I lower to Fire than last Amazon as manufacturers. are Ford from volumes Stellantis And production. Although production the

programs opportunities And revised As to the vehicles fiscal on opportunities award of Ford progress. XXXX dollars. year. Explorer; increase rear-seat and Navigator years our for more program for awards spoke you $XX awards. model turned with The now discussing those expected am Aviator; up are Expedition throughout programs, we're brings to and we substantially four entertainment quarter to will have XXXX. total the may through program recall happy the of cover, over we've the call, Ford, we to new which additional million There other value third various $XXX the while report I into program lead new awards projections in and million adding now extending the hope

with strong. relationship remains very Our Ford

be August we've prudent In delayed the ranging for covering production, Pacifica; million and combat Stellantis, moved we taking some announced previously proposed presented We If should and XXXX. our we a by just for approach suppliers Dodge all improved part Ram $XXX are acceptable of in by the through TI market have And an hopeful XXXX option we for a for we based announced approximately recently back everything new in therefore through revised quick terms to more January expect demand to resume in conditions further of a shortages is slated vehicles to alternatives minimal years production with mentioned. awards downward. light this can allocation any disruption. the XX. that alternative Texas of are and quickly. has were to If and that yesterday we and this program, Stellantis, pent-up agreed they board contract As expect Instruments We the on model American Stellantis this we're are the and decided would Cherokee we to, catch chip. that it be delays advised on been up utilizing for And award another chip I Wagoneer; the November the North next validation position hopeful lifetime burdens was and are of as in that the that know rescinding to quarter.

can are Truck, PACCAR, fact they producing Daimler and such we and trucking of This truck are companies Volvo they they being approximately we pick may that If OEM through strong XX% will manufacturers ship growth up we despite in the numbers getting the previously are Street Additionally, orders have XQ, the well should be as business met, companies with approves recent Journal for most flat announced numbers of only fiscal as OEM strong bodes have Stellantis one reports. programs business business Wall are our according inventory Navistar. with the but in the year, year. new the the projected accepting our thereafter. the OEM new this our If board, to see on-hand -- only

in business continue million our fiscal fiscal XXXX, grow, million from and this year, to to to products aftermarket brands, group. sales past million drive in $XX $XXX doubling in our and distributors $XXX Lastly, nearly continues XXXX this fiscal

on the fiscal in believe have still as largely Premium this Consumer. positive grew the million, supply in fiscal we million the in two over segment hindered year bars we million past XXXX years. $XXX to issues, to three from $XXX grow of over WiFi the and to chip used to $XXX in next Moving XXXX sound Consumer this The $XXX plan. grew $XXX fiscal expand QX. sales believe and doubled due we roughly view million past for chip experienced in in modules three past of loosens Onkyo million remained challenges have Audio. year. Premium over some opportunities AV the during chips we securing targets, My at this Despite very which sales to some year. Sales to we can beyond even soon group Audio and at to as coming in the years, receivers, up, growth but coming here we've are the growth And

were this Korean We Taiwan, international within more we marketplace. and distribution. fiscal products with South In first partnerships. and set in in Hong big The the regions. regions. business Dolby higher performed story technology sales direct the year, up and although brands growth first important consumer strong our the APAC launched line, and speaker to projects well, this opened will We distribution Vietnam fiscal have have and number In our expanded market and we launch will Onkyo, Kong, which and distribution established and in quarter and TC XXXX, own market operation course target sold within Heritage segment, be the competitive flat with new had we through growth the TC year, distributor this drive of Klipsch fiscal the for EMEA a Thailand Atmos Seoul. set our XX established introduced for EMEA year. relatively both Teac captured our and Klipsch both expanded segment bars XX coming Esoteric in XXXX. to PGA are McLaren Within in Biometrics in We China, of Klipsch Australia, which sound We fourth share is

and We automotive expand previously. in new in beginning we've have discussed as health projects within the care, sector and banking will

we Additionally, place. management new have in

this there will reduced securing supply We up a be as improvements In as remains chips chain through closing, for riding The expect have continue already challenging. overhead financial hurdles are to the we and significantly we concern, year. move year.

to need we Stellantis. As modify our program with indicated,

is arbitration Seaguard consumer. California course, of in rule which District June X. the And or to to on with award Court have modify also is our vacate We impacting judge is in motion there expected on the the ruling, that the US inflation now

forward. received, have to growth we for business volumes some that this. pursuing, key our and made a of across have of EyeLock and in our our the drive pipeline at factors sales, we are higher moving I'm increased year generate momentum segments. ensure we both awards and programs strong in bottom should success. this and have aftermarket OEM are should acquisitions Onkyo, for place the or However, Higher automotive ability and opportunities top all expansion confident line The

should normal year. steps cost Providing the stabilize, improve margin our be terms this Our more based we of have seasonality, we on expect lower taken fiscal call and Thank the Michael, And half, review. Mike? in past to in first the second this drive I'll financial at half profitability. turn should for in the stronger you. time, to the which over significantly XXXX

Michael Stoehr

$X.X quarter Thanks, questions. then call a before with Consumer, I'll approximately year-end declined grew $X.X Fourth Pat. other for CE revenue. Audio's by million product to $X.X the fourth quarter and and increased and by by $X product million make the up Automotive respect everyone. the with Good with Premium Starting the Within our move comparisons we morning revenue open million. down comments million sales CE up few segment balance million. $X.X segment to and sheet sales

grew, more holiday chain segment impacted and by shortages promotions. had year the the chip we were and While we supply last

Additionally, the Premier of decision launch Reference was made the and to XXXX in Speaker the back hold lines first quarter. fiscal Referenc

the Automotive, up drive new million The programs grew shortages the impacted driving increase volumes of which OEMs producing Nissan, The $XX.X XX.X%. Though rear-seat entertainment due Pat sales the sales Automotive product which and segment $X.X million. also $X.X million includes entertainment OEM lower OEM approximately higher product was of up over with the Ford, acquisition sales sales of the During and OEM helped OEM. Within and supply aftermarket $XX.X product was million volumes sales rear-seat sales forecasted by were OEM XX%. result aftermarket declined and year-over-year and sales revised periods, we sales distribution as higher Germany. as our programs. product trucks. XX Stellantis up were with increase $XX was over Comparing noted, a agreement increase aftermarket to was TC, up chain by new million also XX.X%, or the XX% the year-over-year, in Driving Pioneer to Onkyo with and than license higher with reported business. annual sales sales

the up million growth sales with The safety The close product our OEM XX approximately big Premium CE sales to million XX% product $X.X a X%, automotive electronics. Audio was had with growth also sales of segment up in CE other and of $XX.X sales down We increase year-over-year. X.X%. of TC was subsidiary driver

gross to Moving margins.

and additional primarily Automotive costs down the basis increase margins to margins points. were TC. consolidated XXX programs. related due adversely reported supply gross to chain basis new margins sales the higher For of points impacted gross XXX an of segment XX CE fourth quarter, and were higher by XX.X%, XX by gross to we OEM segment basis improved points, costs

comparisons, For XXX CE Automotive $XX.X profit by declined and by Net by segment the by basis basis declined declined gross but consolidated gross annual gross XXX segment million. margins increased gross points, operating XX basis margins points. margins points expenses.

and higher general $X.X $X.X acquisition For office and expenses which million. primarily incurred the $XXX,XXX technical higher in to of last related increased versus support quarter, and expenses. million a fourth in by expenses by expenses Selling a impairment administrative increased trademark incurred We operating Onkyo and engineering CE by $XXX,XXX. quarter, were and expenses asset operating expenses, approximately segment. and headcount Onkyo higher a full increased subsidiary higher drivers a $XX.X million fees, $XX.X the amortization increase million. The expenses driven technical related advertising of expenses new costs and to related web some of in engineering and expenses, of million DEI and products. and amortization. to subsidiary and headcount and higher We bigger which were new office and depreciation higher had new payroll programs higher were related direct related higher the labor and occupancy support salary the related OEM primarily year expenses expenses to R&D support expenses, fiscal fourth our depreciation fiscal to related and fiscal in we Also In XXXX and charge year's of and $X.X by intangible XXXX, increase

incurred year-over-year. acquisition to and Onkyo we venture up joint $X.X with Lastly, million, Sharp. the costs transaction established million relates the This $X.X of

for $X.X fourth income to With $X.X results we of which at incurred as other to total in -- XXXX, our joint comparison in income XX/XX expense, income respect ASA charges impairment lower the million the offset asset million venture quarter primarily just and I equity incurred an tangible As decline covered. fiscal equity also reported investees.

Pat Seaguard this recorded paid comparisons the with million labeled increased to arbitration you'll the No the relates award. $XXX,XXX. arbitration, annual statement. approximately see on been expense the $XX.X our yet annual an it This which Staying earlier. as cash income For but expenses has by about interim is spoke comparisons,

XXXX million period. $XX.X fiscal XXXX. as quarter, fiscal compared came fiscal EBITDA $X.X reported compared in million the fiscal $XX.X to million adjusted $XX.X fourth to million XXXX adjusted for in at in XXXX we And EBITDA comparable Lastly, of in

net the press to EBITDA our find both reconciliation in to can VOXX release EBITDA of You Form attributable adjusted XX-K. income and and

of November Moving to compared sheet. $XX.X as balance XX, $XX.X cash million year cash XXXX. February the We million with XX, million as ended and the of and as in $XX.X to equivalents XXXX

increased securing our and As during earlier, year. anticipated needs are purchases Pat on indicated for cash due inventory we the inventory using to times customers' lead based

use to arbitration, bank half expect utilize our of cash outcome first throughout operations. Seaguard the our fund the on the facilities to We depending of and XXXX

returning second year more are historical patterns, we accordingly. up to in should the seasonal cash ramp half and of sales the As

February Our million $XX.X XX, XXXX. as $XX.X total position and $X.X was February XX, debt of to as XX, of million of XXXX million as November XXXX, compared

period. prior year of as not $X to stood fiscal of million $X.X were shareholder and our payable remarks XXXX, any to Our Euro joint ready two, ago our fiscal and to operator for in open Sharp costs $X.X loan for Germany, latter at call part the consists are compared million Total and debt ABL debt the This mortgage, $X.X for German for our for million as million million VOXX we concludes issuance XXXX of period. to Florida venture comparable up related my The loan long-term structure. capital the shareholder total ABL present questions. $X.X

Operator

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

line open. is Your

Tom Forte

Pat. Thanks Great.

So a go three I'll questions. have at I time. one

talk beyond mitigate you your can question inflation first efforts have prices? the increasing is about So I to

Pat Lavelle

or had. to categories should of get Stellantis, production for throughout tariffs also not been also of have chips get some about obviously, that are Yeah. us. redesigning the we've the the in moved boards chips away but that of pricing only within outside lower year cost automotive with group either we within -- consumer or lower. can side get But procure that to China we've from price to talked within we We've Well, increases some entire the that to

of a to expect that the increase have cost We year starting started that cost we've container than freight container see we going year we to of an much off mitigate been a last over but the year for different last on point off for at don't seen. and So host are things shipments, much in. higher increases

are well. outbound as not and we're We dealing increasing can we surcharges prices. to on inbound with that everything freight doing further and – we But believe increases mitigate the that avoid and

Tom Forte

Excellent. wanted and Consumer from that is sounds about describing electronics. lines, I is product what product And second just three like Automotive, categories across for is across to demand but you questions hear very demand you're your still talk the – can consumer It you? all strong that

Pat Lavelle

Yeah. in to we're there once Again, and point. because Well, hold. that essentially many demand. that I'll we believe start – markets of up be particular many now distribution, will we're say demand are And we're we still not we're Onkyo, have bringing our this at able production, strong cases, first, ramping meeting on Consumer we production expanding up are

then they have chip And car situation mention is and just of an the new So demand very, economic the demand the we demand see that demand high not manufacturers. there. met for with even really I may've the cars loosening depends building. and up a it on downturn, is very strong certainly in

sides we of good on business, all see demand. So, our

strong more solution. everything, the side security to with we see there Biometric Biometric moving all see do the and On companies demand we and cyber a

Tom Forte

to thoughts to and third hear like attractive down? haven't if to shifting seems M&A. evaluations you you're current opportunities very come already – some I the wanted going be final of And It starting with on presented Excellent. – question, your are

Pat Lavelle

sufficient company, are If we always to potential particular to and looking will want that quantities things, can the to we always We've place and that, us sure move everything meet investment that continue we first, acquisitions. our want else we we us year. decide financing been we that But have allow bankers have. the on our products have That to throughout that. that ahead a first make existing would we in the of demand bring do in bringing

Tom Forte

the Great. questions, Thanks for Pat. taking

Pat Lavelle

Okay, Tom. you. Thank

Operator

the Our of next line Ruttenbur come Capital. from question Imperial Brian from will

begin. You may

Brian Ruttenbur

Yes. Thank much. you very

and is So potential It's I'll or then let other worst-case with kind Is questions, million jump some me start to that over roughly off correct? that the $XX settlement. scenario. of settlement, a

Pat Lavelle

Yeah.

Brian Ruttenbur

lump say, a work? And would the worst-case a that the or all kind appeals year goes be a scenario, after process of paid two sum through worst out as as let's

Pat Lavelle

to lose our were once we mitigating, award, paid this if is out you would Yeah, made. decision it know that be

Brian Ruttenbur

this or of to kind in in in And your anything revenue of revenue? of how XXXX Okay. impact else does in terms having terms impact, of this, terms then because you the product near-term of change

Pat Lavelle

does a Yes, this so from is case It standpoint. revenue not impact us old. at all

Brian Ruttenbur

Okay. Then move questioning I'll Good. on line to real of another quick.

growth, terms In gave of of out are that while a little that there talking goal? you a still $X guidance And long-term billion still that? kind and your you getting ago you see as that behind of to about that

Pat Lavelle

Absolutely.

else. we additional of in adding With we deal, to we've now, more talking won could up, for we're exceed $XXX talking if other we interest Onkyo awards from we'll said that as Ford million from repeatedly, number can as be expect ramp to a parts that we And are that I've have and sales, manufacturers business the to work to We're everything business. us in the us. out procure them car purchasing as a that able

do business, awards us. when add are ahead of most the So where math the that automotive we I the in of additional from we've are won to

bodes it exceed next Automotive can to launch years. will of produce business back number I the That somewhat that $X manufacturers the of a car when few get these to the the do as market they over all normal to want the they growth increases So math as strong we expect see And in produce. vehicles programs billion. for well where sales

Brian Ruttenbur

double-digit lot kind What guidance. is single-digit last out know of then about XXXX growth? margin supply demand. a expansion, of parameters And unknowns is -- Okay. on you could there's you Can was of open-ended. that any given growth, there the there kind It talk I question

Pat Lavelle

Yes, to double-digit Again, get that there's componentry we Again, can We demand see we all remains not unknowns. depends whether going which need, think the growth. will on of a strong. or lot -- China caveat we're the we with out their shutdowns, there the not it's have big we may COVID starts what which that's shipments which of or do whether really delaying out unpredictable ports, is -- COVID policy. it

So the we're those the remains are that one each are segments things demand the in there, strong out but of in. that

with they're it new chip program, with going TI the proposal a growth, to proposal. where board As to new mentioned have stands in we our they ahead now give the I the move we've the for ready could the don't that for received, and if right second Stellantis good modification would August be that agree and and because if out chip, us our of they allocation them half year, our on for

they that I this do So think have significant growth year. we'll

Brian Ruttenbur

Great. Thank you.

Pat Lavelle

you. Brian. Thank

Operator

Alex Instructions] [Operator the next Albertini Capital of [ph] [ph]. from XPO question Our from line comes

may You begin.

Unidentified Analyst

wondering, Hi on the with bit inventory there of build. just provide can guys. you color a us I'm just

looking one quarter inventories period. over through that been thing. that's, actually up and just So the have at I'm holiday the And

us inventory slightly can is Onkyo the time, coming question last you And Panjiva as like then, I up. had -- product this actually feel this but tell is, if I'm sales of you're line mentioned a trying contributed to through bit break for like like-for-like looks much track to your sources are I adjusting business imports I in has bringing acquired? out we've quarter, far? or stripping we what that line about more figure you've Onkyo? other less top And the what when new top how so just coming down of a out Onkyo get So, for, that So is

Michael Stoehr

want Pat, inventory? you the take me do to

Pat Lavelle

the Yes, can you talk about inventory.

Michael Stoehr

float we because position inventory that, group. the of up. portion the have a than inbound the to than the related of larger company normally our have we XX% do to transit In of coming and us And moved right. product approximately, All times greater that's is Consumer in of that's

Unidentified Analyst

see. I Okay.

Pat Lavelle

carrying of inventory. We're extra days an XX

inventory used Just to overseas. XX -- in it bring to to from take days us

in forced give your Now, being we're order be -- ourselves bring XX your guidance days. to to customers, now sure to of

Unidentified Analyst

you rates, guys or purely have you on to are And do some on attracted? exposed spot capacity

Pat Lavelle

have rates, when on marketplace contracted carriers like We No, stuff spot sales issue or some that. there's with like and stuff spike we go that.

our TC as we in Onkyo, almost through far XX grew As operation sales by $XX million year-over-year.

this those where category. will to that And as us everything to expect we continue long-term significant up chips to, able we're at to secure give the and within production of would dry. some the that many obviously, and secure for markets to it us inventory be we'll There marketplaces. partner very soon manufacturing ability holding be thing our is The Part Sharp, So But ramping grow is only getting able up we receive, that securing is back, to getting levels. as are that strong ramp parts we in supply production. able better every that of month. growth and need. we problem the anticipate able that And will is be the business

Unidentified Analyst

Okay. Thank you.

Operator

the [Operator in And Thank you any you Instructions] Thank conference queue. further concludes showing This I'm call. questions for not today's participating.

You disconnect. have may day. now Everyone great a

Pat Lavelle

you've for this year, the today. all taken Have good a you look forward appreciate your VOXX. in Thank I time I interest and to day.

Glenn Wiener	Investor Relations
Pat Lavelle	President & Chief Executive Officer
Michael Stoehr	Senior Vice President & Chief Financial Officer
John Shalam	Chairman and Founder
Tom Forte	D.A. Davidson
Brian Ruttenbur	Imperial Capital

VOXX International (VOXX) 17 May 222022 Q4 Earnings call transcript