From the Wires
VOXX International Corporation Reports Fiscal 2013 Third Quarter Results
By: PR Newswire
Jan. 9, 2013 04:30 PM
HAUPPAUGE, N.Y., Jan. 9, 2013 /PRNewswire/ -- VOXX International Corporation (NASDAQ: VOXX), today announced financial results for its fiscal 2013 third quarter ended November 30, 2012.
Fiscal Third Quarter Highlights:
Commenting on the Company's performance, Pat Lavelle, President and CEO stated, "From a bottom-line perspective, we had one of the best quarters in our history and our business performed well, especially considering continued weakness in the international markets. Our domestic operations met plan with sales reaching targets and gross margins slightly ahead of internal projections. We've also placed greater emphasis on managing our core overhead and saw expenses, less Hirschmann, decline by over 5%. What we can control, we're controlling and we're on track to deliver the Adjusted EBITDA guidance we gave last quarter."
Lavelle continued, "Domestically, we had strong placement at retail driven by new products and through new channels. We also saw increases in our mobile OEM business on the heels of programs with Ford and Nissan which began last quarter. While overall retail sales during the Holiday season were lighter than anticipated, we're hoping the recently passed legislation will provide some clarity for consumers and give them confidence moving into 2013. With modest improvements in Germany and China, coupled with continued strength in our core domestic markets, we should be well positioned to improve on our performance next year, especially with new products coming to market in the 2nd half of the calendar year. The reception we've received so far at the Consumer Electronics Show this week has been nothing short of spectacular."
Fiscal Third Quarter Performance
Electronics sales were $201.5 million and $165.9 million for the comparable fiscal third quarters, an increase of 21.4%. Driving this increase was primarily the addition of Hirschmann sales, which accounted for $39.5 million during the fiscal 2013 third quarter. Excluding the impact of Hirschmann, Electronics sales declined approximately $3.9 million or 2.4% with the declines primarily in consumer products, mobile audio and in the international markets. Offsetting this decline were increases in mobile OEM sales, particularly at Invision on the strength of new OEM programs with Ford and Nissan for rear-seat entertainment, higher sales of headphones and sound bars, and new product offerings. For the three months ended November 30, 2012, Electronics sales represented 82.9% of net sales as compared to 80.2% in the comparable prior year period.
Accessories sales for the fiscal 2013 third quarter were $41.6 million, an increase of 1.7% as compared to sales of $40.9 million in the comparable prior year period. The Accessories group was favorably impacted by higher domestic sales of new wireless speakers, digital antennas and both portable power lines and power supply systems. This growth was partially offset by declines internationally. Accessories represented 17.1% of net sales for the three months ended November 30, 2012 as compared to 19.8% in the comparable prior year period.
The gross margin for the three months ended November 30, 2012 was 28.8%, a decrease of 10 basis points as compared to 28.9% for the fiscal 2012 third quarter, though margins did come in ahead of internal projections. This slight year-over-year decline was principally due to unfavorable swings between hedged costs and related sales, as well as lower sales of higher margin car speakers at Audiovox Germany. This was offset by higher margins in select consumer, accessories and mobile product categories, the addition of Hirschmann sales, and as a result of exiting some lower margin products. The Company reiterated its prior gross margin guidance of 28.0% for the fiscal year.
Operating expenses for the fiscal 2013 third quarter were $50.2 million, an increase of $8.8 million over $41.4 million reported in the fiscal 2012 third quarter. As a percentage of net sales, operating expenses increased to 20.6% as compared to 20.0% for the periods ended November 30, 2012 and November 30, 2011, respectively. The increase in operating expenses was primarily driven by the addition of Hirschmann, which accounted for $10.9 million, as well as increases advertising expenses. Offsetting this were reductions in depreciation expense, sales commissions and professional fees, not considering Hirschmann, headcount reductions in select groups, and lower occupancy costs due to the purchase of the Klipsch headquarters. Excluding the addition of Hirschmann expenses, operating expenses declined $2.1 million for the comparable quarters or 5.1%.
The Company reported operating income of $19.8 million for the fiscal 2013 third quarter compared to operating income of $18.4 million in the comparable year ago period, an increase of $1.4 million or 7.3%. Net income for the quarter ended November 30, 2012 was $13.2 million or net income per diluted share of $0.56 as compared to net income of $8.9 million and net income per diluted share of $0.38 for the period ended November 30, 2011.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fiscal 2013 third quarter, was $25.8 million as compared to EBITDA of $19.2 million for the comparable period in fiscal 2012, an improvement of $6.6 million. Taking into account stock-based compensation, Klipsch settlement recoveries and Asia restructuring charges, the Company reported Adjusted EBITDA of $25.7 million as compared to $22.2 million in the comparable year-ago period. Fiscal 2012 third quarter also includes a $2.6 million net settlement charge related to the patent infringement suit. The Company reported Diluted Adjusted EBITDA per common share of $1.09 as compared to $0.96 for the same periods as noted above.
Nine Month Comparisons
Accessory sales increased by $12.7 million or by 12.0%, driven primarily by the continued increase in domestic sales of new wireless speakers, digital antennas and both portable power lines and power supply systems, partially offset by declines internationally. As a percentage of net sales, Accessories represented 18.8% vs. 19.9% for the comparable nine-month periods ended November 30, 2012 and November 30, 2011, respectively.
The gross margin for the nine months ended November 30, 2012 was 27.9%, an increase of 10 basis points as compared to 27.8% for the same period last year. The increase in gross margins was principally due to higher sales of OEM related products, higher margins of select consumer accessories products including wireless Bluetooth speakers, headphones and sound bars, as well as the Hirschmann acquisition. These increases were partially offset by the unfavorable swings between hedged costs and related sales, increased freight costs and slower car speaker sales at Audiovox Germany, and the shift in the Company's warehouse facilities in Asia.
Operating expenses for the fiscal 2013 nine month period were $145.4 million, an increase of $28.1 million over $117.3 million reported in the comparable fiscal 2012 period. This increase was primarily driven by the addition of Hirschmann expenses, which accounted for $32.1 million, as well as higher advertising expenses. Excluding the addition of Hirschmann expenses, operating expenses declined $4.0 million for the comparable nine month periods, or 3.4%.
The Company reported operating income of $29.7 million for the fiscal 2013 nine month period compared to operating income of $30.1 million in the comparable year ago period. Net income for the nine-month period ended November 30, 2012 was $12.2 million or net income per diluted share of $0.52 as compared to net income of $14.8 million and net income per diluted share of $0.64 for the nine-month period ended November 30, 2011. Net income decreased versus the comparable year primarily as a result of expenses associated with the patent lawsuit and losses on forward exchange contracts, partially offset by decreased tax provisions and the addition of the Hirschmann acquisition.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fiscal 2013 nine month period, was $36.4 million as compared to EBITDA of $37.2 million for the comparable period in fiscal 2012. Taking into account stock-based compensation, net settlement charges related to the patent litigation, Asia restructuring charges, settlement recoveries at Klipsch, acquisition related costs, and losses on foreign exchange contracts as a result of the Hirschmann acquisition, the Company reported Adjusted EBITDA of $49.1 million as compared to $42.1 million in the comparable year-ago period, an improvement of $7.0 million. Diluted adjusted EBITDA per common share for the fiscal 2013 nine month period was $2.08 as compared to $1.82 for the same period in fiscal 2012.
We present adjusted EBITDA and diluted adjusted EBITDA per common share in this Form 10-Q because we consider them to be useful and appropriate supplemental measures of our performance. Adjusted EBITDA and diluted adjusted EBITDA 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 costs and foreign exchange gains or losses relating to our acquisitions, litigation settlements and restructuring charges 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 appropriate measures for performance relative to other companies. Adjusted EBITDA should not be assessed in isolation from or construed as a substitute for EBITDA prepared in accordance with GAAP. Adjusted EBITDA and diluted adjusted EBITDA per common share are not intended to represent, and should not be considered to be more meaningful measures than, or an alternative to, measures of operating performance as determined in accordance with GAAP.
Conference Call Information
About VOXX International Corporation
Today, VOXX International is a global company….with 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 is now comprised of over 30 trusted brands. Among the key domestic brands include Klipsch®, RCA®, Invision®, Jensen®, Audiovox®, Terk®, Acoustic Research®, Advent®, Code Alarm®, CarLink®, Excalibur® and Prestige®. International brands include Hirschmann Car Communication®, Klipsch®, Jamo®, Energy®, Mirage®, Mac Audio®, Magnat®, Heco®, Schwaiger®, Oehlbach® and Incaar™. The Company continues to drive innovation throughout all of its subsidiaries, and maintains its commitment to exceeding the needs of the consumers it serves. For additional information, please visit our Web site at www.voxxintl.com.
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SOURCE VOXX International Corporation
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