Audiovox Corporation : VOXX International Corporation Reports Fiscal 2012 Third Quarter Results

HAUPPAUGE, N.Y., Jan. 9, 2012/PRNewswire/ -- VOXX International Corporation (NASDAQ: VOXX), today announced financial results for its fiscal 2012, third quarter and nine months ended November 30, 2011.

Commenting on the Company's performance, Pat Lavelle, President and CEO stated, "Our business continued to gain traction across multiple markets, product lines and geographies, and I believe we're well positioned moving into 2012.  We have a number of new products coming to market, new accounts at retail and with automotive OEMs, and several new programs and partnerships kicking off this year.  The holiday season is over and while not overly robust, there was a pick-up in certain categories, which should continue into our fourth fiscal quarter, and hopefully into next year.  We believe we're in a good position for organic growth and continued profitability in fiscal 2013." 

Lavelle continued, "We're also pleased with our performance year to date, though we had budgeted for higher sales.  Klipsch, our automotive business and international operations, have all performed at or ahead of plan, and each group has me excited about our prospects.  Consumer weakness, however, primarily in the U.S. and at retail, led to a modest slowdown in our consumer accessories segments.  On the positive side, the steps we took to improve margins and operating efficiencies, and to right size our expense structure, have resulted in bottom-line performance which is tracking ahead of our initial plan.  As such, we believe our sales for the year will be in excess of $700 millionand we're raising our EBITDA forecast to $44 million." 

Net sales for the fiscal 2012 third quarter, were $206.8 million, an increase of 26.7% compared to net sales of $163.2 millionin the comparable year ago period. For the nine month period ended November 30, 2011, net sales were $530.5 million, an increase of 25.5% as compared to net sales of $422.8 millionfor the comparable nine month period in fiscal 2011.

For the three and nine month periods ended November 30, 2011, Electronics sales were $165.9 millionand $425.0, an increase of 35.3% and 36.0%, respectively over the comparable prior year periods.  Accessories sales were $40.9 millionand $105.5 million, an increase of 0.9% and a decrease of 4.4%, respectively.  The Electronics Group was favorably impacted by the addition of Klipsch, and continued increases in the automotive OEM channel, driven by increases in domestic car sales and new OEM programs for remote start and mobile entertainment systems.  Additionally, Accessories sales were up slightly for the quarter, primarily due to increased sales in international markets.  Offsetting these improvements were lower sales of consumer electronics products and a decline in the audio category.  As a percentage of net sales, Electronics represented 80.2% and 80.1% of the net sales for the three and nine month periods ended November 30, 2011, and Accessories represented 19.8% and 19.9% for the comparable three and nine month periods ended November 30, 2011. 

The gross margin for the three months ended November 30, 2011was 28.9%, an increase of 770 basis points as compared to 21.2% for the three months ended November 30, 2010.  For the comparable nine month periods, the gross margin was 27.8% as compared to 21.1%, an increase of 670 basis points.  Gross margins continue to increase throughout the year, driven by the shift in product mix more towards high-end audio and mobile OEM products.   During the three and nine month periods, gross margins were also positively impacted by new product introductions, better margins in exciting product lines, lower sales in our fulfillment business, and reduced charges for required inventory provisions and a decline in warehouse and assembly expenses. 

For the three and nine months ended November 30, 2011and November 30, 2010, operating expenses were $41.4 millionand $117.3 million, an increase of $12.2 millionand $32.3 million, respectively.  The increase was due primarily to expenses from our Klipsch acquisition, which accounted for approximately $9.8 millionand $29.0 millionfor the three and nine months ended November 30, 2011.  Additionally, this was partially related to an increase in compensation expense and non-recurring professional service fees associated with the Company's patent infringement case.   These increases were partially offset by reductions in depreciation expense, headcount reductions in select groups and a benefit recorded related to put options.  The Company continues to monitor its expense structure and identify synergies within its existing businesses.

The Company reported operating income of $18.4 millionfor the third quarter of fiscal 2012, compared to operating income of $5.4 millionin the comparable year ago period.  For the nine month period ended November 30, 2011, the Company reported operating income of $30.1 millionas compared to operating income of $4.1 millionfor the period ended November 30, 2010, a $26.0 millionimprovement.

Net income for the three month period ended November 30, 2011was $8.9 millionor $0.38per basic and diluted share as compared to net income of $3.9 millionor earnings per basic and diluted share of $0.17for the third quarter of fiscal 2011. For the nine months ended November 30, 2011, net income was $14.8 millionor $0.64per basic and diluted share as compared to net income of $5.6 millionor earnings per basic share of $0.25and per diluted share of $0.24for the comparable nine month period ended November 30, 2010.

Adjusted net income for the three month period ended November 30, 2011was $9.1 millionor $0.39per diluted share compared to $4.3 millionor $0.19per diluted share for the comparable year ago period.  For the nine month period ended November 30, 2011, adjusted net income was $16.2 millionor $0.70per diluted share compared to $6.2 millionor $0.27per diluted share for the comparable nine month period. 

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of fiscal 2012, was $18.7 millionas compared to EBITDA of $8.0 millionfor the comparable period in fiscal 2011, an improvement of $10.7 million.  Adjusted EBITDA for the same periods was $19.1 millionand $8.5 million, respectively.  For the nine month period ended November 30, 2011, EBITDA was $37.1 millionas compared to EBITDA of $14.7 million, an improvement of $22.4 million.  Adjusted EBITDA for the same periods was $39.4 millionand $16.0 million, respectively.  Adjusted EBITDA for the three and nine month periods excludes stock-based compensation and Klipsch acquisition costs.

A reconciliation of GAAP net income to Adjusted EBITDA can be found in the Company's Form 10-Q for the period ended November 30, 2011. 

Non-GAAP Measures
Adjusted net income and adjusted EBITDA are not financial measures recognized by GAAP.  Adjusted net income represents net income, computed in accordance with GAAP, before stock-based compensation expense, a tax refund, and costs relating to the Klipsch acquisition.  Adjusted EBITDA represents net income, computed in accordance with GAAP, before interest expense, taxes, depreciation and amortization, stock-based compensation expense and costs relating to the Klipsch acquisition.  Depreciation, amortization, and stock-based compensation expense are non-cash items.  Adjusted net income per diluted share is calculated by dividing adjusted net income by diluted shares outstanding calculated in accordance with GAAP.

We present adjusted net income and related per diluted share amounts as well as adjusted EBITDA in this release because we consider them to be useful and appropriate supplemental measures of our performance.  Adjusted net income and related per diluted share amounts as well as adjusted EBITDA 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 relating to the Klipsch acquisition and the tax refund 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 net income and adjusted EBITDA should not be assessed in isolation from or construed as a substitute for net income prepared in accordance with GAAP.  Adjusted net income and adjusted EBITDA 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.

Conference Call Information
The Company will be hosting its conference call on Tuesday, January 10, 2012at 10:00 a.m. EST, and clicking on the webcast in the Investor Relations section or via teleconference (toll-free number: 866-383-8108; international: 617-597-5343; pass code: 22494010).  For those who will be unable to participate, a replay will be available approximately one hour after the call has been completed and will last for one week thereafter (replay number: 888-286-8010; international replay: 617-801-6888; pass code: 92271941).

About VOXX International Corporation
VOXX International Corporation (NASDAQ:VOXX) is the new name for Audiovox Corporation, a company that was formed over 45 years ago as Audiovox that has grown into a worldwide leader in many automotive and consumer electronics and accessories categories, and now into premium high-end audio.  Through its wholly owned subsidiaries, VOXX International proudly is recognized as the #1 premium loudspeaker company in the world, and has #1 market positions in automotive video entertainment and remote starts and TV remote controls and reception products.  The Company's brands also hold leading market positions across a wide-spectrum of consumer and automotive segments.

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, Mexicoand 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®, Omega®, Excalibur®, Prestige®, and SURFACE™.  International brands include 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 .

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 statement. 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 mobile and consumer electronics businesses as well as the accessories  business; 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; 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, 2011.

Company Contact:
Glenn Wiener, GW Communications
Tel: [phone] / Email: [e-mail]

VOXX International Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
		November 30, 2011				February 28, 2011
Assets		(unaudited)
Current assets:
Cash and cash equivalents		$	18,836			$	98,630
Accounts receivable, net		163,476				108,048
Inventory, net		147,785				113,620
Receivables from vendors		4,222				8,382
Prepaid expenses and other current assets		8,967				9,382
Deferred income taxes		2,338				2,768
Total current assets		345,624				340,830
Investment securities		13,027				13,500
Equity investments		14,730				12,764
Property, plant and equipment, net		23,199				19,563
Goodwill		87,366				7,373
Intangible assets, net		177,327				99,189
Deferred income taxes		11				6,244
Other assets		3,718				1,634
Total assets		$	665,002			$	501,097

VOXX International Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
		November 30, 2011				February 28, 2011
Liabilities and Stockholders' Equity		(unaudited)
Current liabilities:
Accounts payable		$	58,799			$	27,341
Accrued expenses and other current liabilities		54,004				36,500
Income taxes payable		4,990				1,610
Accrued sales incentives		21,226				11,981
Deferred income taxes		388				399
Current portion of long-term debt		4,293				4,471
Total current liabilities		143,700				82,302
Long-term debt		67,659				5,895
Capital lease obligation		5,235				5,348
Deferred compensation		3,224				3,554
Other tax liabilities		1,788				1,788
Deferred tax liabilities		30,931				4,919
Other long-term liabilities		4,459				4,345
Total liabilities		256,996				108,151
Commitments and contingencies
Stockholders' equity:
Series preferred stock, $.01 par value; 1,500,000 shares authorized, no shares issued or outstanding		-				-
Common stock:
Class A, $.01 par value; 60,000,000 shares authorized, 22,630,837 shares issued and 20,813,705 shares outstanding at November 30, 2011 and 60,000,000 shares authorized,  22,630,837 shares issued and  20,813,005 shares outstanding February 28, 2011		226				226
Class B convertible, $.01 par value; 10,000,000 shares authorized, 2,260,954 shares issued and outstanding at November 30, 2011 and February 28, 2011		22				22
Paid-in capital		278,625				277,896
Retained earnings		151,810				137,027
Accumulated other comprehensive income (loss)		(4,301)				(3,849)
Treasury stock, at cost, 1,817,132 shares of Class A common stock at November 30, 2011 and 1,817,832 shares of Class A common stock at February 28, 2011		(18,376)				(18,376)
Total stockholders' equity		408,006				392,946
Total liabilities and stockholders' equity		$	665,002			$	501,097

VOXX International Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share and per share data)
(unaudited)
		Three Months Ended November 30,								Nine Months Ended November 30,
		2011				2010				2011				2010
Net sales		$	206,803			$	163,167			$	530,465			$	422,778
Cost of sales		146,960				128,570				383,072				333,650
Gross profit		59,843				34,597				147,393				89,128
Operating expenses:
Selling		12,620				9,498				35,723				25,951
General and administrative		24,740				16,674				68,159				50,034
Engineering and technical support		4,021				3,023				11,839				9,052
Acquisition-related costs		25				-				1,607				-
Total operating expenses		41,406				29,195				117,328				85,037
Operating income		18,437				5,402				30,065				4,091
Other (expense) income:
Interest and bank charges		(1,371)				(471)				(4,246)				(1,392)
Equity in income of equity investees		1,236				600				3,255				2,348
Other, net		(3,308)				363				(4,054)				2,363
Total other (expense) income, net		(3,443)				492				(5,045)				3,319
Income before income taxes		14,994				5,894				25,020				7,410
Income tax expense		6,136				2,035				10,237				1,786
Net income		$	8,858			$	3,859			$	14,783			$	5,624
Net income per common share (basic)		$           0.38				$	0.17			$	0.64			$	0.25
Net income per common share (diluted)		$	0.38			$	0.17			$	0.64			$	0.24
Weighted-average common shares outstanding (basic)		23,074,030				22,934,211				23,073,983				22,904,746
Weighted-average common shares outstanding (diluted)		23,074,030				23,098,948				23,203,504				23,057,969

VOXX International and Subsidiaries
GAAP Net Income to Adjusted Net Income
For the Three and Nine Months Ended November 30, 2011
Reconciliation of GAAP to Adjusted Net Income Available to Common Shareholders
		Three Months Ended November 30,								Nine Months Ended November 30,
		2011				2010				2011				2010
Net income		$	8,858			$	3,859			$	14,783			$	5,624
Adjustments:
Klipsch acquisition costs		25				-				1,607				-
Stock Compensation		353				428				728				1,284
Discrete tax item		-				-				-				(750)
Tax effects of above adjustments		(154)				-				(955)				-
Pro forma net income		$	9,082			$	4,287			$	16,163			$	6,158
GAAP net income per common share, diluted		$	0.38			$	0.17			$	0.64			$	0.24
Pro forma net income per common share, diluted		$	0.39			$	0.19			$	0.70			$	0.27
Diluted weighted average number of shares (GAAP and pro forma)		23,074,000				23,098,948				23,203,504				23,057,969

Reconciliation of GAAP Net Income to Adjusted EBITDA
		Three Months Ended November 30,								Nine Months Ended November 30,
		2011				2010				2011				2010
Net income		$	8,858			$	3,859			$	14,783			$	5,624
Adjustments:
Interest expense, net		1,371				471				4,246				1,392
Depreciation and amortization		2,401				1,682				7,829				5,874
Taxes		6,136				2,035				10,237				1,786
EBITDA		18,766				8,047				37,095				14,676
Stock-based compensation		353				428				728				1,284
Klipsch acquisition costs		25				-				1,607				-
Adjusted EBITDA		$	19,144			$	8,475			$	39,430			$	15,960

SOURCE VOXX International Corporation