Fiscal 2022 Second Quarter Investor Presentation - October 12, 2021
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Safe Harbor Statement Exchange: Nasdaq Market Cap*: ~$268 million Ticker Symbol: VOXX Stock Price*: $11.05 Headquarters: Orlando, FL 52 Week Range*: $8.50 - $27.78 Fiscal Year-End: February 28, 2021 Average Daily Volume*: ~203,000 shares * As of October 12, 2021 Disclaimer Except for historical information contained herein, statements made in this release constitute forward-looking statements and thus 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 the: risk factors described in the Company's annual report on Form 10-K for the fiscal year ended February 28, 2021, and other filings made by the Company from time to time with the SEC. The factors described in such SEC filings include, without limitation: the impact of the COVID-19 outbreak on the Company's results of operations, the Company's ability to realize the anticipated results of its business realignment; cybersecurity risks; 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 electronics, consumer electronics and biometrics 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 restrictive debt covenants. Many of the foregoing risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. The Company assumes no obligation and does not intend to update these forward-looking statements. 2
Fiscal 2022 Second Quarter Executive Commentary “The VOXX team has done a good job navigating through what we believe was the worst of the supply chain shortfalls and we have the inventory on hand or in transit, to deliver for our customers. Excluding professional fees related to transactions which are now complete, our operations performed slightly better than the first half of Fiscal 2021, with Adjusted EBITDA up $3.9 million. We expect growth will continue in the second half of the year and to be up approximately 15% for the full fiscal year. We also expect to generate strong profitability, with extra investments in R&D to support new automotive OEM programs and future EyeLock business.” “While the industry still faces supply chain constraints, I believe we have taken the right steps to offset the higher costs of doing business, providing us with more flexibility. New automotive OEM awards received and with more expected, expanded distribution within our Premium Audio group and the added contributions from our acquisition of Onkyo’s home entertainment A/V business, and our new distribution agreement with GalvanEyes for EyeLock’s biometrics products, all provide avenues for strong growth and improved bottom-line performance in the years ahead.” Pat Lavelle, President and Chief Executive Officer 3
Financial Snapshot Second Quarter and Six-Month Periods Second Quarter Comparisons: q Growth continued, with more expected v Net sales of $143.1 million vs. $128.0 million, up $15.1 million or 11.8% q Gross margins impacted by global supply chain constraints (higher v Net income attributable to VOXX International Corporation of $0.3 million vs. $7.3 million container costs and surcharges, cost of materials and shipping, fuel costs, etc.) v Adjusted EBITDA of $6.4 million vs. $14.0 million q Operating expenses up due to higher professional fees, DEI subsidiary Six-Month Comparisons: overhead, NRE expenses and outside labor, commissions related to sales v Net sales of $280.2 million vs. $200.0 million, up $80.2 million or 40.1% increases, and additional R&D, etc. v Net income attributable to VOXX International Corporation of $3.0 million vs. net loss q Non-recurring expenses incurred for attributable to VOXX International Corporation of $0.9 million professional fees and NRE expenses q Adjusted EBITDA declined modestly v Adjusted EBITDA of $14.6 million vs. $10.7 million, up $3.9 million when comparing fiscal second quarters and increased YOY in 1st half periods Comparisons are for the Fiscal 2022 and Fiscal 2021 first quarters ended May 31, 2021, and May 31, 2020. 4 NRE defined as Non-Recurring Expenses / EBITDA defined as Earnings Before Interest, Taxes, Depreciation & Amortization.
Financial Snapshot - Revenue Growth Continues – Net Sales Up for the Comparable Second Quarter and Six-Month Periods Second Quarter Sales Comparisons Six-Month Sales Comparisons Consolidated Net Sales Consumer Electronics Consolidated Net Sales Consumer Electronics + 11.8% + 2.1% + 40.1% + 27.8% $128.0M $143.1M $95.0M $97.0M $200.0M $280.2M $149.5M $191.1M Q2 FY21 Q2 FY22 Q2 FY21 Q2 FY22 1H FY21 2H FY22 1H FY21 2H FY22 Automotive Electronics Biometrics Automotive Electronics Biometrics + 40.2% - 3.8 % + 77.2% + 27.2 % $32.6M $45.8M $0.3M $0.3M $49.9M $88.4M $0.4M $0.5M Q2 FY21 Q2 FY22 Q2 FY21 Q2 FY22 1H FY21 2H FY22 1H FY21 2H FY22 5 Comparisons are for the fiscal second quarter and six-month periods ended August 31, 2021, and August 31, 2020.
Key Growth Drivers Through the First Half of Fiscal 2022 ü DEI subsidiary (formed in July 2020) ü OEM rear-seat entertainment (RSE) – Stellantis, Nissan and Ford ü Automotive safety electronics products ü OEM and aftermarket security products, primarily remote starts ü Aftermarket RSE systems ü Premium home theater systems ü Premium wireless computer speaker systems ü Premium and other wireless speakers, and subwoofers ü Premium mobility products ü 11 Trading Company (formed in 2Q Fiscal 2021) – Onkyo and Pioneer products ü NIXT products, which were introduced in the second half of Fiscal 2021 ü Future contributions anticipated from GalvanEyes, healthcare agreement and other awards 6
Additional Consolidated Information Consolidated Results Second Quarter Comparisons v Gross margin of 26.0%, down 370 bps, primarily driven by industry-wide supply chain constraints v Total operating expenses of $39.9 million, an increase of $10.4 million, of which $4.1 million are considered non-recurring v $3.0 million of professional fees (non-recurring) v $1.7 million in higher overhead at DEI (owned for full quarter in Fiscal 2022 vs. 2-months in Fiscal 2021) v $1.5 million related to furloughed employees and salary and bonus reductions during COVID lockdown in Fiscal 2021 v $1.1 million in NRE expenses and additional labor expenses related to new OEM program (non-recurring) Six-Month Comparisons v Gross margin of 26.4%, down 260 bps; gross profit increased by $15.8 million v Total operating expenses of $77.0 million, an increase of $19.4 million, of which $6.8 million are considered non-recurring v $5.4 million in higher overhead at DEI (owned for all of 1H Fiscal 2022 vs. 2-months in Fiscal 2021) v $4.8 million of professional fees (non-recurring) v $2.5 million related to furloughed employees and salary and bonus reductions during COVID lockdown in Fiscal 2021 v $2.0 million in NRE expenses and additional labor expenses related to new OEM program (non-recurring) 7 Comparisons are for the fiscal second quarter and six-month periods ended August 31, 2021, and August 31, 2020.
Additional Segment Information Automotive Electronics Segment Consumer Electronics Segment Second Quarter Comparisons Second Quarter Comparisons v OEM products sales up 53.1% v Premium Audio product sales up 9.9% v Aftermarket product sales up 33.9% v CE product sales down 19.0% v Gross margin of 23.9%, up 330 basis points (bps) v Gross margin of 26.9%, down 600 bps v Equity in income of equity investees up $0.2 million v Income before taxes of $2.4 million, down $10.4 million v Income before taxes of $0.9 million, up $0.7 million Six-Month Comparisons Six-Month Comparisons v OEM product sales up 70.5% v Premium Audio product sales up 42.3% v Aftermarket product sales up 81.1% v CE product sales down 5.1% v Gross margin of 25.4%, up 580 bps v Gross margin of 26.7%, down 540 bps v Equity in income of equity investees up $2.0 million v Income before taxes of $7.9 million, down $4.8 million v Income before taxes of $4.2 million, up $7.0 million 8 Comparisons are for the fiscal second quarter and six-month periods ended August 31, 2021, and August 31, 2020.
Balance Sheet Update Cash Position Increased and Long-Term Debt Declined Compared to Fiscal 2022 First Quarter • Ended FY22 second quarter with $41.1 million in cash and cash equivalents vs. $36.7 million • Ended FY22 second quarter with total long-term debt, net of debt issuance costs of $5.2 million vs. $5.3 million • Total cash and cash equivalents declined compared to Fiscal 2021 year-end by $18.3 million, which takes into account cash usage of $8.4 million to fund Onkyo’s operations (Note), which was satisfied and paid off as part of the transaction • Credit Facility of $140 million, untapped as of August 31, 2021 • Sufficient working capital to fund business and execute strategy 9 Comparisons are for the Fiscal 2022 second quarter ended August 31, 2021, and the Fiscal 2022 first quarter ended May 31, 2021 unless noted otherwise.
Upcoming Drivers to our Business Performance: Automotive ~$400 Million of New OEM Awards Received over the Past ~Two Years with More Pending Sampling of Automotive OEM Awards Since Q1 FY 2020* Rear-Seat Entertainment q Stellantis: ~$300 million over 5-years for EVOLVE w/ Amazon’s Fire TV q Ford: ~$75 million over 3-years for EVOLVE w/ Amazon’s Fire TV (other RSE programs) q Nissan: ~$20 million over 2 ½-years for RSE (EVO + accessories) Other OEM Awards Disclosed q Navistar (EVSS – VSM) q Nissan (Fog Light Kits – VSM) q Polaris (Camara systems – VSM) q Subaru (Remote start program) q Volvo, Volvo Europe and Mekra Lang (Lighting programs) 10 * Based on discussions with Stellantis and pending final receipt of the awards.
Upcoming Drivers to our Business Performance: Automotive (Cont’d) Full Year of DEI Results: Long-Term Opportunities with New Brands, Product Lines and Distribution • FY21 2nd quarter acquisition • Leader in remote start/security and telematics/connected car categories • Strong brand portfolio, engineering talent and distribution • Expected to add ~$50 million in annual sales at the time of acquisition; now expect ~$65 million • Significantly strengthens VOXX’s aftermarket offering when combined with our other brands and reach 11
Upcoming Drivers to our Business Performance: Consumer Expanding Global Customer Base / Building Market Share in Key Channels 12
Upcoming Drivers to our Business Performance: Consumer (Cont’d) Key Premium Audio Partnerships / Return to More Normalized Pre-COVID Environment 13
Upcoming Drivers to our Business Performance: Consumer (Cont’d) Acquisition of Onkyo’s Home Entertainment A/V Business Future Growth Drivers New Licensing and Distribution Agreement with Pioneer q PAC and Sharp formed JV to acquire the home audio/video business of Onkyo Home Entertainment Corporation on 6/28/21 Brands Added in April 2022 q Transaction closed on September 8th: purchase price of $30.8M plus certain liabilities q PAC is majority shareholder with majority voting rights q PAC will manage worldwide distribution and all sales and marketing; Sharp responsible for manufacturing q JV owns the brands, IP, engineering, and manufacturing for Onkyo and Integra brands q New licensing and distribution agreement with Pioneer Corporation (Pioneer and Pioneer Elite brands) q Expect ~$50 million in revenue in Fiscal 2022 and potential higher 14
Upcoming Drivers to our Business Performance: Biometrics Exclusive Distribution Agreement Between EyeLock LLC and GalvanEyes Partners LLC New Distribution Partner with Extensive Global Relationships Across Untapped Geographies and Markets q Three (3) year exclusive distribution agreement with GalvanEyes Partners LLC (“GalvanEyes”; managed by Beat Kahli) q Exclusivity covers the EU, Switzerland, Puerto Rico, Malaysia, and Singapore; in the U.S. markets, exclusivity is for the residential real estate market and specific U.S. Government agencies q Non-exclusive distribution rights in all territories and markets with the Company’s consent q In consideration, GalvanEyes has agreed to pay EyeLock $10.0 million in the form of an annual fee of up to $5.0 million q Put/call arrangement for a 20.0% interest in EyeLock (terms included in DEF14A) q Approved at the Company’s Annual Meeting of Stockholders 15
Fiscal 2022 Second Half Outlook – Long-Term Momentum Fiscal 2022 Second Half Outlook – Longer-Term Views Ø Expect modest top-line improvement in Fiscal 2022 2H vs. Fiscal 2021 2H Ø Total sales in Fiscal 2022 anticipated to be $640 - $650 million Ø Gross margins more stable based on actions to date / should improve in Fiscal 2023 with higher gross profit contributions from Onkyo’s operations Ø Fiscal 2022 2H operating expenses more normalized / anticipate $9 million increase YOY in 2H with $8 million of the increase related to the addition of Onkyo Ø Well-positioned to grow across each business segments in the years ahead Ø Balance sheet remains strong; cash on hand and access to capital Ø Opportunities for acquisitions exist with many companies still hurt by COVID environment 16
For more information on VOXX International Corporation, please visit our website at www.voxxintl.com. Investor Relations Contact: Glenn Wiener, President & CEO GW Communications Tel: 917-887-8434 Email: gwiener@GWCCo.com 17
You can also read