VOXX International Corporation Reports Its Fiscal 2017 Fourth Quarter and Year-End Financial Results

HAUPPAUGE, N.Y., May 15, 2017 /PRNewswire/ -- VOXX International Corporation (NASDAQ: VOXX), today announced financial results for its Fiscal 2017 fourth quarter and year-ended February 28, 2017. 

• Fiscal 2017 Q4 operating income of $0.4 million, a year-over-year increase of $8.0 million
• Fiscal 2017 Q4 EBITDA of $8.0 million, a year-over-year increase of $9.0 million
• Fiscal 2017 operating loss of $0.2 million, a year-over-year improvement of $11.4 million
• Fiscal 2017 EBITDA of $30.1 million, a year-over-year improvement of $11.3 million
• Company anticipates top- and bottom-line improvements in Fiscal 2018

Commenting on the Company's performance, Pat Lavelle, President and CEO of VOXX International stated, "We had several positive developments throughout our business segments in Fiscal 2017 and the transformation of our Premium Audio segment was perhaps the biggest story.  We generated growth of 18.7% and improved profitability within the Premium Audio segment and we continued to win large, multi-year awards in our Automotive Segment, which have us positioned for growth in Fiscal 2018.  While Consumer Accessories segment revenues declined year-over-year, the majority of the decline was in our fourth quarter.  We have a number of new products, partnerships and added distribution within Consumer Accessories, both domestically and abroad, which gives us confidence in our ability to grow this segment in the coming year.  All in all, we posted an $11.4 million improvement in operating income and an $11.3 million improvement in EBITDA."

Lavelle continued, "Throughout the year, we set in motion a series of events to streamline operations and leverage synergies within our organization.  These efforts, along with improvements in our supply chain led to a gross margin improvement in Fiscal 2017 of 90 basis points and a reduction in operating expenses of $5.6 million.  Additionally, we focused R&D investment dollars on next generation products, particularly within our Premium Audio and Automotive segments.  We have seen some of the results in our Fiscal 2017 financial performance and expect Fiscal 2018 will build on the momentum.  Our foundation is stronger, as are our offerings, and we believe VOXX is positioned well to generate further top- and bottom-line improvements."

Fiscal Fourth Quarter Comparisons (for the periods ended February 28, 2017 and February 29, 2016)

Net sales for the Fiscal 2017 fourth quarter were $167.4 million, compared to $169.7 million reported in the comparable year-ago period, a decline of $2.3 million or 1.4%. 

• Automotive segment sales were $85.6 million as compared to $84.8 million, an increase of $0.8 million or 1.0%.  The increase was primarily related to higher automotive OEM sales.
• Premium Audio segment sales were $43.0 million as compared to $36.2 million, an increase of $6.8 million or 18.6%.  The year-over-year increase was driven by higher sales across the majority of product lines, particularly new products introduced throughout Fiscal 2017.
• Consumer Accessories segment sales were $38.8 million as compared to $48.6 million, a decline of $9.7 million or 20.1%.  The sales decline was primarily related to higher sales of outdoor wireless speakers in the Fiscal 2016 fourth quarter, due to strong load-ins which did not repeat in the same volume, as well as lower sales of reception products, remotes and other categories.  These declines were partially offset by higher sales of Project Nursery and digital audio product lines. 

The gross margin for the Fiscal 2017 fourth quarter came in at 30.3% as compared to 27.6% for the same period last year, an increase of 270 basis points.  Driving this improvement were higher gross margins in the Automotive segment.

Operating expenses for the Fiscal 2017 fourth quarter were $50.3 million as compared to $54.3 million in the Fiscal 2016 fourth quarter, a reduction of $4.1 million or 7.5%. Included in the Fiscal 2016 fourth quarter operating expenses are impairment charges of $2.9 million that did not repeat in Fiscal 2017.  The remaining decline is primarily due to lower labor costs, including a reduction in research and development expenses and a modest decline in selling expenses.

The Company reported operating income of $0.4 million in its Fiscal 2017 fourth quarter as compared to an operating loss of $7.5 million in the comparable year-ago period.  The $8.0 million year-over-year improvement was driven by higher gross margins and lower total operating expenses, as noted above.  Net loss attributable to VOXX International Corporation for the Fiscal 2017 fourth quarter was $0.1 million or $0.00 per basic and diluted share, as compared to a net loss attributable to VOXX International Corporation of $5.4 million or a loss of $0.22 per basic and diluted share in the Fiscal 2016 fourth quarter. 

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the Fiscal 2017 fourth quarter was $8.0 million as compared to an EBITDA loss of $1.0 million reported in the Fiscal 2016 fourth quarter, an improvement of $9.0 million.  Adjusted EBITDA was $8.1 million as compared to Adjusted EBITDA of $2.0 million for the comparable Fiscal 2017 and 2016 fourth quarter periods, representing an increase of $6.1 million.

FY17 vs. FY16 Comparisons (for the twelve-months ended February 28, 2017 and February 29, 2016)

Fiscal 2017 net sales were $681.0 million compared to $680.7 million reported in the comparable year-ago period, an increase of $0.3 million. 

• Automotive segment sales were $337.2 million as compared to $351.7 million, a decline of $14.4 million or 4.1%. Aftermarket product sales declined year-over-year and a portion of this was due to the sale and subsequent licensing of all Jensen Mobile inventory.  Offsetting this decline were higher Automotive OEM sales, driven by higher tuner sales internationally, as a result of new OEM programs beginning in Fiscal 2017.
• Premium Audio segment sales were $166.8 million as compared to $140.5 million, an increase of $26.3 million or 18.7%.  The year-over-year increase was driven by several new product introductions, including various lines of HD wireless desktop and bookshelf size speakers, wireless sound bars, multi-room streaming audio systems and headphones.  Additionally, the Company saw increases in sales of its existing lines of home entertainment speakers and commercial speakers.  These increases were partially offset by lower European sales as a result of a slower market overseas.
• Consumer Accessories segment sales were $176.2 million as compared to $187.3 million, a decline of $11.1 million or 5.9%.  The majority of the decline was in the Company's fourth fiscal quarter, due to unfavorable comparisons related to stronger Fiscal 2016 product load-ins and spring orders that were delayed.  Additionally, the Company saw year-over-year declines across select product categories domestically, including wireless speakers, reception products and remotes.  This was partially offset by higher sales of Project Nursery baby monitors, the 360Fly® Action Camera, and higher international sales related to the roll-out of an upgrade to the digital broadcasting platform in Europe. 

The gross margin for Fiscal 2017 was 29.6% as compared to 28.7% for Fiscal 2016, an increase of 90 basis points.  Automotive segment gross margins were 30.9%, an increase of 150 basis points; Premium Audio segment gross margins were 33.0%, a decline of 20 basis points; and Consumer Accessories segment gross margins were 23.6%, a decline of 70 basis points.

Operating expenses in Fiscal 2017 were $201.7 million compared to $207.3 million in Fiscal 2016, a reduction of $5.6 million.  Selling, general and administrative expenses of $156.1 million declined by $3.8 million or 2.4%, due to continued cost control measures throughout the Company.  Engineering and technical support expenses of $45.6 million increased by $8.1 million year-over-year, as the Company continued to invest in Research & Development to support various Automotive OEM projects and new product launches within the Premium Audio segment.  Additionally, Fiscal 2016 included $9.1 million of intangible asset impairment charges related to certain trademarks of the Company and $0.8 million of acquisition-related costs that did not repeat in the current year.

The Company reported an operating loss in Fiscal 2017 of $0.2 million as compared to an operating loss of $11.6 million in Fiscal 2016, a year-over-year improvement of $11.4 million.  The Company reported net income attributable to VOXX International Corporation of $4.4 million or net income per basic and diluted share of $0.18 in Fiscal 2017.  This compares to a net loss attributable to VOXX International Corporation of $2.7 million or a loss per basic and diluted share of $0.11 in Fiscal 2016.

EBITDA for Fiscal 2017 was $30.1 million as compared to EBITDA of $18.8 million reported in Fiscal 2016, an improvement of $11.3 million.  Adjusted EBITDA was $30.9 and $24.8 million for the comparable Fiscal 2017 and 2016 years, an improvement of $6.0 million.

Non-GAAP Measures

EBITDA, Adjusted EBITDA and Diluted Adjusted EBITDA per common share are not financial measures recognized by GAAP.  EBITDA represents net income (loss), computed in accordance with GAAP, before interest expense and bank charges, taxes, and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted for stock-based compensation expense, impairment charges, certain foreign currency remeasurements, restructuring charges, as well as costs and bargain purchase gains relating to our acquisitions. Depreciation, amortization, stock-based compensation, bargain gains and impairment charges are non-cash items. Diluted Adjusted EBITDA per common share represents the Company's diluted earnings per common share based on Adjusted EBITDA.

We present EBITDA, Adjusted EBITDA and Diluted Adjusted EBITDA per common share in this Form 10-K because we consider them to be useful and appropriate supplemental measures of our performance. Adjusted EBITDA and diluted adjusted earnings per common share help us to evaluate our performance without the effects of certain GAAP calculations that may not have a direct cash impact on our current operating performance. In addition, the exclusion of certain costs or gains relating to non-recurring events allows for a more meaningful comparison of our results from period-to-period. These non-GAAP measures, as we define them, are not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies. EBITDA, Adjusted EBITDA and Diluted Adjusted EBITDA per common share should not be assessed in isolation from, are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP.

The Company will be hosting its conference call on Tuesday, May 16, 2017 at 10:00 a.m. ET.  Interested parties can participate by visiting www.voxxintl.com, and clicking on the webcast in the Investor Relations section or via teleconference (toll-free number: 877-303-9079; international: 970-315-0461 / conference ID: 12837314). 

About VOXX International Corporation

VOXX International Corporation (NASDAQ: VOXX) has grown into a worldwide leader in Automotive, Consumer Electronics, Consumer Accessories and Premium Audio.  Today, the Company has an extensive distribution network that includes power retailers, mass merchandisers, 12-volt specialists and most of the world's leading automotive manufacturers.  The Company has an international footprint in Europe, Asia, Mexico and South America, and a growing portfolio, which now comprises over 30 trusted brands. Among the Company's brands are Klipsch®, RCA®, Invision®, Jensen®, Audiovox®, Terk®, Acoustic Research®, Advent®, Code Alarm®, Car Connection®, 808®, AR for Her®, Prestige®, EyeLock, Hirschmann Car Communication®, Jamo®, Energy®, Mirage®, Mac Audio®, Magnat®, Heco®, Schwaiger®, Oehlbach®, and Incaar™.  For additional information, please visit our Web site at www.voxxintl.com.

Safe Harbor Statement

Except for historical information contained herein, statements made in this release that would constitute forward-looking statements may involve certain risks and uncertainties. All forward-looking statements made in this release are based on currently available information and the Company assumes no responsibility to update any such forward-looking statements. The following factors, among others, may cause actual results to differ materially from the results suggested in the forward-looking statements. The factors include, but are not limited to risks that may result from changes in the Company's business operations; our ability to keep pace with technological advances; significant competition in the automotive, premium audio and consumer accessories businesses; our relationships with key suppliers and customers; quality and consumer acceptance of newly introduced products; market volatility; non-availability of product; excess inventory; price and product competition; new product introductions; foreign currency fluctuations and concerns regarding the European debt crisis; restrictive debt covenants; the possibility that the review of our prior filings by the SEC may result in changes to our financial statements; and the possibility that stockholders or regulatory authorities may initiate proceedings against VOXX International Corporation and/or our officers and directors as a result of any restatements. Risk factors associated with our business, including some of the facts set forth herein, are detailed in the Company's Form 10-K for the fiscal year ended February 28, 2017.

Company Contact:
Glenn Wiener, President
GW Communications
Tel: 212-786-6011
Email: [email protected] 

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SOURCE VOXX International Corporation