イベント日時：2024年10月11日 / 午後2時 UTC

企業参加者

会議の参加者

プレゼンテーション

オペレーター

2025年第2四半期の業績発表会議の発表にお集まりいただき、ありがとうございます。（オペレーターの指示）本日の会議は記録されていますので、ご了承ください。

今日は会議の司会を、投資家関係のグレン・ウィーナーさんにお任せします。ご発言をお願いします。

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グレン・ウィーナー GW通信 - 投資家向け情報

ありがとうございます、そしておはようございます。VOXXインターナショナルの2025会計年度第2四半期の業績発表会議コールへようこそ。昨日、私たちはフォーム10-Qを提出し、プレスリリースを発行しました。どちらの文書も、弊社ウェブサイトの投資家向け情報セクション（www.voxxintl.com）にあります。

今日は、最高経営責任者のパット・ラヴェル、最高財務責任者兼最高執行責任者のロリアン・シェルトンが参加しました。彼らは今日の電話会議で準備された発言をしてくれます。その後、質問を受け付けます。この四半期にはたくさんの活動がありましたが、今日の電話での質問も大歓迎です。また、オフラインでフォローアップしたい場合は、いつでも私のオフィスに連絡できます。

慣例としての免責事項とセーフハーバーについてお伝えします。ここに含まれる歴史的情報以外の、本日の会議とウェブキャストにおける声明は、現時点で入手可能な情報に基づく前向きな見通しの声明となります。会社はこのような前向きな見通しの声明を更新する責任を負いません。当社の事業に関連するリスク要因については、2024年2月29日時点の10-Kに詳細に記載されていることをお知らせします。

それでは、パット・ラベル氏に会議の司会を引き継ぎます。パットさん、お願いします。

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パトリック・ラヴェル ボックス・インターナショナル - 最高経営責任者、取締役

グレン、皆さん、おはようございます。5月に第1四半期の結果を報告して以来、いくつか非常に重要なマイルストーンがありました。四半期の財務状況とビジネス展望に入る前に、私たちの戦略について話す時間を取るほうがよいと考えました。さらに、ビジネス部門を実行する際、多くの行動を強調します

我々は進行中および今後のプログラムを含め、VOXXをより強く、より利益を生み出す企業に戻し、より高い評価を受ける企業にするために取り組んでいます。

2024会計年度に入ると、総負債額が7300万ドルを超えていました。これは不利なSeaguard判決に続くもので、この時点での赤字の拡大に対して既に高すぎた4200万ドルの負債が追加されました。そこで、私たちは2つのことを達成することにしました。最初は、できるだけ早く負債を返済することで、これにより利払いが減少し、利用可能な借り入れ額が増加します。過去の低負債レバレッジ比率に注意すれば、これはかつて享受していた財政上の柔軟性を与えることにも繋がります。

そして、第二に、来年の予想売上に基づいてビジネスを再構築し、リサイズするために、困難ですが必要なことを実行しました。これを行うために、プレイ中の戦略的な売却に基づいて、ビジネスがどうなるかを調整する必要がありました。年末以降、両面で重要な進展を遂げており、これからもさらなる進展が期待される状況に至っています。これに続いて、第三に戦略的な代替プロセスについて述べます。四半期中に、バランスシートを迅速に改善し、VOXXを収益性に戻すための戦略プロセスに参加し、ブランド売却、その他の資産売却、グループおよびビジネス売却、合弁事業や提携、さらには企業の売却など、可能なすべての手段を検討しています。

私たちはブランドやビジネスへの関心を引き続き受けているため、それらから得られる価値をかなり知っています。現在のプロセスは、関心を持つ団体の範囲を拡大し、非中核資産を収益化し、株主の利益に繋がるより利益の上がる貴重なビジネスを築くための最善の方策を本当に見つけることに焦点を当てています。

したがって、私たちは、私たちのビジネスの一部やGentexのように全体としてVOXXに興味を持っている関係者と引き続き話を進める予定です。率直に言って、私たちは2025会計年度のある時点まで待つことを好んだでしょう、その時には、負債を減らし、ビジネスを再編成し、より収益性の高いビジネスを提供し、キャッシュフローと収益を生み出し、オープン市場でより高い評価を獲得できると信じています。

このため、この四半期には、業績が低迷していた国内アクセサリービジネスを売却しました。プレミアムオーディオポートフォリオの非コアブランド2つを売却し、メキシコへのOEm製造移行によりフロリダの不動産を売却しました。この売却により、総収益4800万ドルを得て、負債の返済に充てました。

さらに、目標とする改善をもたらす初期のリストラプログラムを完了しました。各ビジネスラインにわたる大量の在庫ロードを処理しました。当初1億2800万ドルあった在庫は、その後約1500万ドル減少し、負債の返済やより通常の運転資本環境下での運営が可能となりました。

長期的には効率性を格段に向上させ、著しいコスト削減につながるERPの実装を進めました。VOXXでは、将来の状態を考慮して多くのプロセスや構造を変更しました。これからは低固定コストベースで運営の基盤を整え、将来の成長をサポートできるようにしています。完成時には、売上を追加コストをかけることなくスケールさせることができると考えています。ロリアンはリストラと財務状況について言及するでしょうので、続けます。

しかし、負債の返済は重要であり、最優先事項でした。そのため、年末から総額5000万ドル以上の負債を返済し、オペレーションに影響を与えることなく達成しました。2024財務データを基に、主に低マージンの売上を約4900万ドル減少させました。最後に、10月9日時点での総負債は2000万ドル以下、純負債は1500万ドル以下になり、現在は実質的に運転資本負債だけからなっています。初めての目標を達成し、時間通りに進捗したと言えます。

So let's move on to the results and our outlook, starting with automotive. Through the first half of fiscal '25, our automotive business is down considerably, and we both expected and planned for it. A few comments on history and strategy. So some of our newer investors have more insight into why our results were down and why our outlook should be better as we move forward.

Prior to COVID, our automotive group was on the upswing. We had the number one market position in rear seat entertainment and remote starts and a stable and profitable business. With our Amazon deal to bring Fire TV into the car, our prospects got even better as this was an industry first, and we had hundreds of millions of dollars in new long-term rear seat awards. We were also getting new contracts out of our more recently acquired OEM operation, VSM, and we were working on some very exciting integrated projects with partners.

And then COVID hit, and the automotive market over the past four years has still not fully recovered. That's the reality of the past. We constantly were taking actions to offset higher prices, product and component shortages, shipment delays, retailer issues, interest rates, and more.

We had various component price increases from vendors, especially in chips, and renegotiated contracts. But at the end of the day, we had to change in order to stop the declines and turn this once consistently profitable business back into a cash-generating entity.

During the first half of fiscal '25, our automotive segments were at 26.8% dip in sales and an 80-basis-point increase in gross margin but lost $3.6 million on a pretax basis.

Now the second half should improve, but still, there are a lot of obstacles we must deal with daily and overcome to ensure we get back to profitability. We have been managing the global supply chain very well. That's one area the team continues to excel at, in my opinion, have done an excellent job this past year given everything that has been thrown at us. Past price increases from vendors should be more normalized as newer programs kick off, and we have several plans in the second half and into fiscal '26 and beyond.

With our OEM manufacturing transitioning to Mexico, and the significantly lower cost to produce and lower cost of labor, coupled with more consistent OEM production, which will improve absorption, gross margins should improve. We will continue to pressure existing customers to modify pricing so that it makes sense to continue our programs with them. This may impact topline revenue. However, we must ensure all programs remain profitable.

Coupled with the fact that we have several new programs coming online for heavy-duty trucks and vehicles which are smaller in nature than the car manufacturers, but these are long-term profitable contracts. And we have several for remote start and security products as well. For example, in Q4, Ford will be launching a new rear seat entertainment system for the Navigator and the Expedition. And we will continue to grow our security program with Ford as well as we have been awarded new vehicles for the Middle East market.

Nissan has kicked off their lighting program that we've talked about previously. The US Postal Service program, which I've discussed is scheduled for a full launch in fiscal 2026. It's a multiyear contract that is expected to ramp considerably next year and over the next several years thereafter.

We have had some new OEM products and integrated systems that are also expected to open up new channels. For example, we currently supply our phone-as-a-key product for the overroad UPS tractor trailers. And we are in tests with a number of fleets that, if awarded, could generate substantial new business in this area. Aftermarket is where we've been hit hard, and it's pretty much related to lower car sales and a weak consumer and retail environment caused by inflation and high interest.

We have managed the inventory very closely. And as a result, we're entering the stronger part of the year with a much better inventory position. As for our consumer, our consumer business -- within consumer, we sold domestic accessories during the quarter for $25 million, while still maintaining our European operation, VOXX Germany. Between Oehlbach and Schwaiger, we do over $30 million in sales, and the business has been historically profitable. The big growth driver for our international accessory business last year was the new solar power balcony product that was introduced.

But due to the overwhelming popularity of this program, a number of competitors have entered the market just as the German and Austrian economy, the largest market for our accessory group has gone into recession. We expect the market to normalize as the glut of competitors lessen or exit the market all together. Schwaiger is the leading accessory company supplying the do-it-yourself market in Germany and Austria. They have great market position, and they anticipate sales will rebound as we move into next fiscal 2026.

The bulk of this segment is premium audio. And here is where we have the greatest optimism for near-term value creation from an operations and a cash flow perspective. Similar to the automotive segment, COVID had a big impact on our business, but in different ways. We saw two very strong years of sales and profitability as consumers were purchasing more stay-at-home products as they were locked in their homes.

The following two years, we saw our industry sales drop just as quickly due to them leaving their homes and doing more experiential vacations and dining out as well as the fact that the normal buying patterns, the normal buying cycles, were interrupted.

Consumers who typically purchase a speaker, a home theater system every three to five years and purchased products all at once during COVID when they were at home, no longer were in the cycle for the following years. Thus, it created market imbalance. Couple this with the fact that we had supply chain and retailer issues, high interest rates and inflation and more, it became a challenging two years.

While our sales are down just $2.5 million year to date, newer products have been selling strong and higher-margin products up as well. We are seeing increases in our new sound bar business. We have made significant strides in new audio categories like our Bluetooth Music City series and with our new party speakers coming to market later this year.

We expect our top line revenue to be essentially in line with last year, but we do expect it to be a year of significantly improved profitability with growth around the corner. Through the first six months of the fiscal year, despite over $21 million decline in total consumer segment sales, we generated pretax income of $4.6 million compared to a loss of $7 million in fiscal 2024.

We're expecting a stronger second half for premium audio as well, both sales and profitability, and we maintain a smaller international accessory business with significant growth potential, but there are very high comparables based on the strong launches in the prior year and the competition I just spoke about. I'm not going to rehash all of the products for Klipsch, but know this, we invested in R&D. We combine part of Onkyo's R&D with Klipsch's bringing the best in design and electronics and acoustics together, and I'm really looking forward to some of the new products that consumers will see starting in the second half of this year and moving into calendar years '25 and '26, and will be across home audio, electronics, lifestyle audio, gaming, and more.

To put it all together and who we are today, VOXX is an automotive business that should be stable and have a lower cost structure and working capital needs. A consumer business made up predominantly of strong Premium Audio brands that can grow modestly but still generate significantly higher profits. And we are a holder of two equity investments, one in BioCenturion LLC, our biometrics business, and the other is in ASA Electronics LLC, our long-standing joint venture that historically has been profitable, has great upside, and significant value.

We've done a lot of heavy lifting, and we have more ahead to get where we need to be, but we believe we are on the right track, knowing we have taken care of debt with improved operations, and we maintain or have grown market share.

And at this point, I'd like to turn the call over to Laurie, and then we'll open it for questions. Loriann?

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Loriann Shelton VOXX International Corp - Chief Financial Officer, Chief Operating Officer, Senior Vice President

Thank you, Pat, and good morning to all of those joining us today. Pat talked to the first half of the year, and I'll provide a brief recap of the quarter. Rather than reading through all of the financials, I'll spend the time talking more about the restructuring and what we've accomplished. Our ERP conversion, what it means for us and where we are now. And lastly, our balance sheet with brief discussions around each transaction future working capital needs, our capital structure. Then we'll open up the call for questions.

I'll start with our fiscal second-quarter financial comparisons for the periods ending August 31, 2024, and August 31, 2023. We reported Q2 sales of $92.5 million, which were down $21.2 million or 18.6%. Our automotive business declined by $9 million with $5.2 million of the decline related to OEM and the remainder to other automotive electronic products. The biggest OEM shortfall was in rear seat entertainment due to lower volumes.

The consumer segment sales were down $12 million with premium audio down $3.3 million and other CE product sales down $8.7 million. The decline in premium audio relates to the fact that last fiscal year included roughly $2.7 million in higher closed out promotion sales and general softness in the global audio market.

We did, however, get a nice sales pickup from the new product lines Pat discussed. Several lines were down while others were up, and we expect more of the same market continues to transition. We also believe that profitability will be enhanced due to the higher margin structure of the new line. The decline in other CE product can be paid to lower year-over-year sales volumes of solar power products in Germany, which were down $8.2 million as we had high load-ins in the prior year period.

Fiscal 2025 Q2 gross margins were 24.5% were down 70 basis points. Automotive segment margins declined 70 basis points, primarily due to product mix and sales declines in higher-margin categories as well as inventory obsolescence. Consumer margins were down 40 basis points, primarily due to the sales declines in Europe and Asia. Margins should be favorably impacted by product mix in the periods, especially when newer products coming to the market.

As for expenses, so the changes we've implemented to date, our operating expenses are lower by $5.3 million or 14.3% when comparing the second quarter. We brought down headcount through restructuring. We lowered executive compensation expenses. We removed EyeLock salaries through the BioCenturion joint venture, and we actively managed all the expenditures of cash, whether internal or external. Pat has said this before, we're placing more emphasis on the value creation of our spend as we look to rightsize and ultimately grow, irrespective of any potential transaction that may occur.

One of my responsibilities to strategy and insurance programs get implemented the right way while maintaining financial discipline throughout. If our business will more normalize, I believe the investors to see the benefits of our efforts in a more meaningful way.

With that said, if things hold and we meet our sales plan for the full year, the actions we've taken to position VOXX for profitability by the end of the year.

I'd like to now discuss restructuring and ERP integration we have been undertaking. With respect to the restructuring, all of the actions we identified to enact at the beginning of the year have been completed. We have implemented all and have achieved the targeted efficiency, not the full saving. That is because we are maintaining the overhead necessary to support the domestic accessories business that we sold in Q2, which, again, we are being reimbursed for.

When the operating agreement terminates, our overhead will be reduced further. I also believe that as our sales grow in the second half of this year and comparatively year over year as we move into fiscal '26 investors will see additional benefits from our restructuring as we should have a more concentrated fixed cost structure.

In the interim, we're going to remain vigilant in our capital allocation plans and look to either save or reinvest depending on what the situation calls for. The Oracle Fusion implementation is the biggest project underway throughout the organization. This has needed investment in our systems that will cause capital to start but generate a substantial ROI over time, both operationally and financially.

We are in the process of designing the right system after extensive upfront research and analysis. After the design work, we will move into testing, validation, and rework if needed. We want to ensure we have the most efficient technology tools based on our needs. There has been an immense focus on data, aggregation, analytics, and sharing of that data with everything geared to make faster, smarter business decisions.

The system is heavily geared to support our business operations, and thus, there is a strong focus on distribution and logistics modules. We'll be testing the system for quite some time, integrating data from all points of sale and then using it in our budgeting and forecasting process, fully automating all forecasting systems both financial and procurement. Our ERP integration is about automating processes and having the right tools to use to gather intelligence to further educate our decision-making. I, for one, after running finance and operations for a very long time, am taking on this project with excitement and care as I just know how much it can help us.

Lastly, our balance sheet. Let me quickly walk you through the numbers and our expected use of capital. First, we exited fiscal 2024 with $73.3 million in debt and our Q2 report yesterday, our total debt position as of August 31 stood at $55.2 million. Using cash from the transaction, post quarter end, we paid down the Florida mortgage debt in full, we paid down our revolving credit facility further, reducing our total debt to a little over $18 million as of yesterday, which includes our $3.9 million shareholder note. Taking into consideration our cash position, our net debt stood at $13.6 million.

As we are now in our third quarter, our busiest selling season, we will be drawing on our revolver to fund inventory needs. Thus, our debt will increase again, and then we start cashing up toward the end of the fourth quarter and into first quarter. Our balance sheet is in good shape, and we are making progress internally.

I'd like to thank you all today for listening in. And operator, we are now ready for questions.

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QUESTIONS AND ANSWERS

Operator

(Operator Instructions) Bruce Olephant, Oppenheimer.

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Bruce Olephant Oppenheimer - Analyst

VOXX purchased Klipsch for $166 million in March 2011, can we make the assumption that 11 years later that Klipsch is worth more than that purchase price?

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Patrick Lavelle VOXX International Corp - Chief Executive Officer, Director

Can we? I would say, yes, because adding to the Klipsch valuation is the Onkyo valuation that we acquired back in 2021. They are a much stronger company today technologically because of the combination of Onkyo's electronics experience and Klipsch's acoustic experience, and we think that is going to be a big driver for us as we move forward.

When we look at the passive loud speaker today, it is morphing into powered speakers or active speakers, where actually the electronics of pushing the sound through the speakers inside the speaker. And the addition of a very, very strong Onkyo Electronics team is allowing us to develop products that we think are going to be most important as we look into the future, Bluetooth, broadcast Bluetooth, and and a number of different products that we will be able to integrate better into our speakers because of our experience with the Onkyo team.

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Bruce Olephant Oppenheimer - Analyst

Is Klipsch up for sale?

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Patrick Lavelle VOXX International Corp - Chief Executive Officer, Director

We are in a process, and that process is to determine the value of the company. And there will be, in my estimation, offers for the entire company, which you've seen with the Gentex offer. And we believe that there will be offers for the entire company, additional offers for the entire company, and there will be offers for some of the parts.

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Bruce Olephant Oppenheimer - Analyst

Are we currently doing any business with Gentex?

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Patrick Lavelle VOXX International Corp - Chief Executive Officer, Director

Yeah. We do a little business with Gentex. We supply the automotive aftermarket with Gentex mirrors.

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Bruce Olephant Oppenheimer - Analyst

So we can -- so actually, for the future, we plan to probably do more business with Gentex?

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Patrick Lavelle VOXX International Corp - Chief Executive Officer, Director

That's our hope. Gentex is a very strong company. They've got great technology. And we think our distribution network, especially into the aftermarket, reaches much further than anything that they may have in distribution. So I see that as a positive.

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Bruce Olephant Oppenheimer - Analyst

And the other question I have here, what would be the common book value? Would it be around $11 a share now?

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Patrick Lavelle VOXX International Corp - Chief Executive Officer, Director

That -- I would say, yes, Lori, if you have any -- I mean we've got about 23 million shares out. And when we look at the value of what we believe between the different operations we have, the real estate that we own, it supports a -- is the valuation there higher?

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Loriann Shelton VOXX International Corp - Chief Financial Officer, Chief Operating Officer, Senior Vice President

I think that's a conservative number, Pat. $11.

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Bruce Olephant Oppenheimer - Analyst

What do you think it is right now? What do you think it is?

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Loriann Shelton VOXX International Corp - Chief Financial Officer, Chief Operating Officer, Senior Vice President

Well, what we think it is and what the market thinks it is may be two different things. But I think the company with its future prospects, stuff, I think you could warrant that type of number.

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Bruce Olephant Oppenheimer - Analyst

Okay. And also, can we make the assumption that being that history says that third quarter is our strongest quarter, can we make the assumption that VOXX will have a profitable third quarter and finish the year profitable?

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Patrick Lavelle VOXX International Corp - Chief Executive Officer, Director

We are looking at what the second half is projected to be based on all the information we get from customers at this time of the year. Promotions that we know will have started. The biggest thing that what we're looking at now is if the economy continues to slow, it may impact some of those projections.

But normally, our second half, especially the third quarter, is a profitable one. And we believe that if we can hit the numbers that we are projecting that we would be profitable for the year.

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Bruce Olephant Oppenheimer - Analyst

Great. And I'm glad to see the great progress that the company has made, and I look for continued success.

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Operator

(Operator Instructions) I would now like to hand the call back to Pat for closing remarks.

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Patrick Lavelle VOXX International Corp - Chief Executive Officer, Director

Well, thank you. If there are no further questions, I want to thank you for your interest in VOXX. It has been a couple of challenging years, but I think we are starting to move forward with the plans that would bring this company back to profitability. So once again, thank you for joining and have a good rest of the day.

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Operator

And this concludes today's conference call. Thank you for participating. You may now disconnect.

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