VOXX Earnings 2019-11-30

VOXX 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
TESS	161	230	125	587	116	2	6	162	20%	27.8	1%
CYBE	121	73	15	65	29	3	7	111	44%	16.4	4%
RADA	100	54	12	0	0	0	0	78			0%
VOXX	97	498	106	439	120	-46	-34	43	27%	-1.3	-9%
PRCP	52	63	21	77	27	-7	-4	47	35%	-11.7	-11%
CUI	25	79	40	98	30	-15	-12	22	31%	-1.9	-18%
TAIT	18	14	1	8	4	1	2	14	46%	9.2	10%
AWSM	14	13	21	20	5	-31	-30	24	28%	-0.8	-233%
QBAK	11	11	4	12	4	1	1	7	32%	10.7	5%
UUU	3	19	9	18	6	-2	-1	3	31%	-2.7	-8%

10-Q 1 voxx-10q_20191130.htm 10-Q voxx-10q_20191130.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-28839

VOXX International Corporation

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		13-1964841 (IRS Employer Identification No.)
2351 J Lawson Blvd., Orlando, Florida (Address of principal executive offices)		32824 (Zip Code)

(800) 654-7750 (Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol:	Name of Each Exchange on which Registered
Class A Common Stock $.01 par value	VOXX	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company, as defined in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of each class of the issuer's common stock outstanding as of the latest practicable date.

Class		As of January 8, 2020
Class A Common Stock		21,707,180 Shares
Class B Common Stock		2,260,954 Shares

VOXX International Corporation and Subsidiaries

Table of Contents

		Page
PART I	FINANCIAL INFORMATION

Item 1	FINANCIAL STATEMENTS
	Consolidated Balance Sheets at November 30, 2019 (unaudited) and February 28, 2019	3
	Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three and Nine Months Ended November 30, 2019 and 2018	4
	Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended November 30, 2019 and 2018	5
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended November 30, 2019 and 2018	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	32
Item 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	44
Item 4	CONTROLS AND PROCEDURES	44

PART II	OTHER INFORMATION

Item 1	LEGAL PROCEEDINGS	45
Item 1A	RISK FACTORS	45
Item 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	45
Item 6	EXHIBITS	46
SIGNATURES		47

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VOXX International Corporation and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

	November 30, 2019			February 28, 2019
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	32,156		$	58,236
Accounts receivable, net		93,356			73,391
Inventory, net		111,089			102,379
Receivables from vendors		218			1,009
Prepaid expenses and other current assets		10,623			10,449
Income tax receivable		578			921
Total current assets		248,020			246,385
Investment securities		2,554			2,858
Equity investment		21,389			21,885
Property, plant and equipment, net		51,350			60,493
Operating lease, right of use asset		2,773			—
Goodwill		54,785			54,785
Intangible assets, net		114,006			119,449
Deferred income tax assets		78			79
Other assets		1,695			2,877
Total assets	$	496,650		$	508,811
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	34,445		$	31,143
Accrued expenses and other current liabilities		37,158			39,129
Income taxes payable		2,072			1,349
Accrued sales incentives		16,667			13,574
Current portion of long-term debt		1,165			10,021
Total current liabilities		91,507			95,216
Long-term debt, net of debt issuance costs		6,019			5,776
Finance lease liabilities, less current portion		855			516
Operating lease liabilities, less current portion		2,127			—
Deferred compensation		2,554			2,605
Deferred income tax liabilities		4,921			5,284
Other tax liabilities		1,125			1,332
Other long-term liabilities		2,401			2,981
Total liabilities		111,509			113,710
Commitments and contingencies (see Note 24)
Redeemable equity (see Note 7)		2,124			—
Stockholders' equity:
Preferred stock:
No shares issued or outstanding (see Note 20)		—			—
Common stock:
Class A, $.01 par value, 60,000,000 shares authorized, 24,306,194 and 24,106,194 shares issued and 21,711,335 and 21,938,100 shares outstanding at November 30, 2019 and February 28, 2019, respectively		244			242
Class B Convertible, $.01 par value, 10,000,000 shares authorized, 2,260,954 shares issued and outstanding at both November 30, 2019 and February 28, 2019		22			22
Paid-in capital		298,760			296,946
Retained earnings		143,934			148,582
Accumulated other comprehensive loss		(18,511	)		(16,944	)
		424,449			428,848
Less: Treasury stock, at cost, 2,594,859 and 2,168,094 shares of Class A Common Stock at November 30, 2019 and February 28, 2019, respectively		(23,216	)		(21,176	)
Less: Redeemable equity		(2,124	)		—
Total VOXX International Corporation stockholders' equity		399,109			407,672
Non-controlling interest		(16,092	)		(12,571	)
Total stockholders' equity		383,017			395,101
Total liabilities, redeemable equity, and stockholders' equity	$	496,650		$	508,811

See accompanying notes to unaudited consolidated financial statements.

VOXX International Corporation and Subsidiaries

Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except share and per share data)

	Three months ended November 30,						Nine months ended November 30,
	2019			2018			2019			2018
Net sales	$	110,112		$	129,637		$	293,812		$	339,359
Cost of sales		78,648			90,714			212,570			241,696
Gross profit		31,464			38,923			81,242			97,663
Operating expenses:
Selling		9,580			10,363			28,162			30,661
General and administrative		16,689			16,482			51,896			49,632
Engineering and technical support		5,059			6,368			15,901			18,349
Intangible asset impairment charges (see Note 10)		—			—			—			9,814
Total operating expenses		31,328			33,213			95,959			108,456
Operating income (loss)		136			5,710			(14,717	)		(10,793	)
Other income (expense):
Interest and bank charges		(751	)		(1,174	)		(2,635	)		(3,391	)
Equity in income of equity investee		967			1,695			3,672			5,146
Gain on sale of real property (see Note 19)		4,057			—			4,057			—
Investment gain (see Note 3)		—			—			775			—
Impairment of Venezuela investment properties (see Note 18)		—			—			—			(3,473	)
Other, net		(322	)		260			1,869			1,173
Total other income (expense), net		3,951			781			7,738			(545	)
Income (loss) before income taxes		4,087			6,491			(6,979	)		(11,338	)
Income tax expense (benefit)		2,720			(4,078	)		1,190			3,147
Net income (loss)		1,367			10,569			(8,169	)		(14,485	)
Less: net loss attributable to non-controlling interest		(1,097	)		(1,642	)		(3,521	)		(4,954	)
Net income (loss) attributable to VOXX International Corporation	$	2,464		$	12,211		$	(4,648	)	$	(9,531	)
Other comprehensive (loss) income:
Foreign currency translation adjustments		(295	)		(1,263	)		(1,321	)		(3,333	)
Derivatives designated for hedging		13			50			(271	)		542
Pension plan adjustments		2			20			25			57
Unrealized holding gain on available-for-sale investment securities, net of tax		—			—			—			24
Other comprehensive (loss) income, net of tax		(280	)		(1,193	)		(1,567	)		(2,710	)
Comprehensive income (loss) attributable to VOXX International Corporation	$	2,184		$	11,018		$	(6,215	)	$	(12,241	)
Income (loss) per share - basic: Attributable to VOXX International Corporation	$	0.10		$	0.50		$	(0.19	)	$	(0.39	)
Income (loss) per share - diluted: Attributable to VOXX International Corporation	$	0.10		$	0.50		$	(0.19	)	$	(0.39	)
Weighted-average common shares outstanding (basic)		24,418,313			24,355,791			24,458,926			24,355,791
Weighted-average common shares outstanding (diluted)		24,625,410			24,628,836			24,458,926			24,355,791

See accompanying notes to unaudited consolidated financial statements.

VOXX International Corporation and Subsidiaries

Unaudited Consolidated Statements of Stockholders' Equity

(In thousands, except share and per share data)

	Class A and Class B Common Stock			Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Non- controlling Interests			Treasury Stock			Redeemable Equity			Total Stock- holders' Equity
Balances at February 28, 2019	$	264		$	296,946	$	148,582		$	(16,944	)	$	(12,571	)	$	(21,176	)	$	-		$	395,101
Net loss		—			—		(1,148	)		—			(1,224	)		—			—			(2,372	)
Other comprehensive loss, net of tax		—			—		—			(904	)		—			—			—			(904	)
Stock-based compensation expense		—			159		—			—			—			—			—			159
Balances at May 31, 2019		264			297,105		147,434			(17,848	)		(13,795	)		(21,176	)		-			391,984
Net loss		—			—		(5,964	)		—			(1,200	)		—			—			(7,164	)
Other comprehensive loss, net of tax		—			—		—			(383	)		—			—			—			(383	)
Stock-based compensation expense		2			1,184		—			—			—			—			(1,025	)		161
Reclassifications of stockholders' equity to redeemable equity (see Note 7)		—			—		—			—			—			—			(745	)		(745	)
Repurchase of 208,312 shares of common stock		—			—		—			—			—			(983	)		—			(983	)
Balances at August 31, 2019		266			298,289		141,470			(18,231	)		(14,995	)		(22,159	)		(1,770	)		382,870
Net income (loss)		—			—		2,464			—			(1,097	)		—			—			1,367
Other comprehensive loss, net of tax		—			—		—			(280	)		—			—			—			(280	)
Stock-based compensation expense		—			471		—			—			—			—			(354	)		117
Repurchase of 218,453 shares of common stock		—			—		—			—			—			(1,057	)		—			(1,057	)
Balances at November 30, 2019	$	266		$	298,760	$	143,934		$	(18,511	)	$	(16,092	)	$	(23,216	)	$	(2,124	)	$	383,017

Balances at February 28, 2018	$	278		$	296,395	$	194,673		$	(14,222	)	$	(5,830	)	$	(21,176	)	$	-		$	450,118
Net loss		—			—		(939	)		—			(1,613	)		—			—			(2,552	)
Other comprehensive loss, net of tax		—			—		—			(1,518	)		—			—			—			(1,518	)
Adjustment to common stock		(14	)		—		—			—			—			—			—			(14	)
Stock-based compensation expense		—			107		—			—			—			—			—			107
Balances at May 31, 2018		264			296,502		193,734			(15,740	)		(7,443	)		(21,176	)		-			446,141
Net loss		—			—		(20,803	)		—			(1,699	)		—			—			(22,502	)
Other comprehensive loss, net of tax		—			—		—			1			—			—			—			1
Stock-based compensation expense		—			127		—			—			—			—			—			127
Balances at August 31, 2018		264			296,629		172,931			(15,739	)		(9,142	)		(21,176	)		-			423,767
Net income (loss)		—			—		12,211			—			(1,642	)		—			—			10,569
Other comprehensive loss, net of tax		—			—		—			(1,193	)		—			—			—			(1,193	)
Stock-based compensation expense		—			159		—			—			—			—			—			159
Balances at November 30, 2018	$	264		$	296,788	$	185,142		$	(16,932	)	$	(10,784	)	$	(21,176	)	$	-		$	433,302

See accompanying notes to unaudited consolidated financial statements.

VOXX International Corporation and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

	Nine months ended November 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(8,169	)	$	(14,485	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		9,897			8,811
Amortization of debt discount		617			616
Intangible asset impairment charge		—			9,814
Bad debt expense		303			372
(Gain) loss on forward contracts		(347	)		132
Equity in income of equity investees		(3,672	)		(5,146	)
Distribution of income from equity investees		4,169			4,899
Deferred income tax (benefit) expense		(338	)		2,606
Non-cash compensation adjustment		(51	)		(840	)
Stock based compensation expense

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	24	$97

10-Q	2020-01-09	Quarter: 2019-11-30
10-Q	2019-10-10	Quarter: 2019-08-31
10-Q	2019-07-10	Quarter: 2019-05-31
10-K	2019-05-14	Annual: 2019-02-28
10-Q	2019-01-09	Quarter: 2018-11-30
10-Q	2018-10-10	Quarter: 2018-08-31
10-Q	2018-07-10	Quarter: 2018-05-31
10-K	2018-05-14	Annual: 2018-02-28
10-Q	2018-01-09	Quarter: 2017-11-30
10-Q	2017-10-10	Quarter: 2017-08-31
10-Q	2017-07-10	Quarter: 2017-05-31
10-K	2017-05-15	Annual: 2017-02-28
10-Q	2017-01-09	Quarter: 2016-11-30
10-Q	2016-10-11	Quarter: 2016-08-31
10-Q	2016-07-11	Quarter: 2016-05-31
10-K	2016-05-16	Annual: 2016-02-29
10-Q	2016-01-11	Quarter: 2015-11-30
10-Q	2015-10-13	Quarter: 2015-08-31
10-Q	2015-07-09	Quarter: 2015-05-31
10-K	2015-05-14	Annual: 2015-02-28
10-Q	2015-01-08	Quarter: 2014-11-30
10-Q	2014-10-09	Quarter: 2014-08-31
10-Q	2014-07-10	Quarter: 2014-05-31
10-K	2014-05-15	Annual: 2014-02-28
10-Q	2014-01-08	Quarter: 2013-11-30
10-Q	2013-10-10	Quarter: 2013-08-31
10-Q	2013-07-10	Quarter: 2013-05-31
10-K	2013-05-15	Annual: 2013-02-28
10-Q	2013-01-09	Quarter: 2012-11-30
10-Q	2012-10-10	Quarter: 2012-08-31
10-Q	2012-07-10	Quarter: 2012-05-31
10-K	2012-05-14	Annual: 2012-02-29
10-Q	2012-01-09	Quarter: 2011-11-30
10-Q	2011-10-11	Quarter: 2011-08-31
10-Q	2011-07-11	Quarter: 2011-05-31
10-K	2011-05-16	Annual: 2011-02-27
10-Q	2011-01-10	Quarter: 2010-11-30
10-Q	2010-10-12	Quarter: 2010-08-31
10-Q	2010-07-12	Quarter: 2010-05-31
10-K	2010-05-14	Annual: 2010-02-28
10-Q	2010-01-11	Quarter: 2009-11-30

8-K	2020-01-09	Earnings, Other Events, Exhibits
8-K	2019-09-30	Leave Agreement, M&A, Other Events, Exhibits
8-K	2019-07-25	Shareholder Vote, Regulation FD, Exhibits
8-K	2019-07-08	Earnings, Officers, Other Events, Exhibits
8-K	2019-06-07	Enter Agreement, Other Events, Exhibits
8-K	2019-05-14	Earnings, Officers, Other Events
8-K	2019-04-29	Other Events
8-K	2019-01-23	Other Events
8-K	2019-01-09	Earnings, Officers, Other Events
8-K	2018-10-10	Earnings, Other Events
8-K	2018-07-19	Shareholder Vote, Regulation FD
8-K	2018-07-10	Earnings, Other Events
8-K	2018-05-14	Earnings, Other Events
8-K	2018-04-19	Enter Agreement, Off-BS Arrangement
8-K	2018-01-09	Earnings, Other Events

EX-31.1	voxx-ex311_50.htm
EX-31.2	voxx-ex312_51.htm
EX-32.1	voxx-ex321_49.htm
EX-32.2	voxx-ex322_48.htm