VOXX International (VOXX) - 2025 Q3 - Quarterly Results

Financial Performance Overview of VOXX's financial results for Q3 and nine months of fiscal 2025, detailing sales declines, gross margin contraction, and significant impairment charges Third Quarter Fiscal 2025 Results VOXX reported a significant downturn in Q3 FY2025 with net sales down 22.2%, gross margin contracting 570 bps, and a $44.0 million net loss due to impairment charges Q3 FY2025 vs. Q3 FY2024 Financial Comparison | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $105.2M | $135.3M | -22.2% | | Gross Margin | 21.2% | 26.9% | -570 bps | | Operating Expenses | $76.6M | $34.1M (adj.)* | +124.6% | | Net (Loss) Income | ($44.0M) | $1.9M | - | | EBITDA | ($40.8M) | $6.5M | - | | Adjusted EBITDA | ($4.7M) | $8.0M | - | *Note: Q3 FY2024 Operating Expenses from chunk 19 ($34,075k) used for comparison as Q3 FY2025 includes significant impairment charges. - The decline in net sales was attributed to adverse economic conditions, issues in retail and OEM manufacturing, and asset sales during Fiscal 2025[3] - Gross margin was negatively impacted by $7.0 million in inventory write-downs across both the Automotive and Consumer Electronics segments[3] - Operating expenses surged due to non-cash charges of $44.3 million, comprising $28.2 million in goodwill impairment and $16.1 million in intangible asset impairment. Excluding these charges, operating expenses actually decreased by 5.2%[3] Nine-Month Fiscal 2025 Results Nine-month FY2025 results show a 19.8% net sales decrease and a $50.8 million net loss, significantly impacted by Q3 impairment charges Nine-Month FY2025 vs. Nine-Month FY2024 Financial Comparison | Metric | Nine-Month FY2025 | Nine-Month FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $289.3M | $360.8M | -19.8% | | Gross Margin | 24.3% | 25.6% | -130 bps | | Operating Expenses | $140.9M | $110.2M | +27.9% | | Net Loss | ($50.8M) | ($19.9M) | - | | EBITDA | ($37.5M) | ($6.5M) | - | | Adjusted EBITDA | ($10.4M) | $3.0M | - | - Excluding the $44.3 million in impairment charges, total operating expenses for the nine-month period declined by $13.6 million, or 12.3% year-over-year[6] - Total other income was $13.1 million, a significant positive swing from a total other expense of $5.9 million in the prior year, primarily due to gains on the sale of a business and assets[6][19] Balance Sheet Highlights As of November 30, 2024, the company's balance sheet showed a decrease in cash and cash equivalents compared to the fiscal year-end, but total debt was substantially reduced Balance Sheet Data (as of Nov 30, 2024 vs. Feb 29, 2024) | Metric | Nov 30, 2024 | Feb 29, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $6.3M | $11.0M | | Total Debt | $18.8M | $73.3M | | Total Long-Term Debt, net | $14.5M | $71.9M | - The total debt of $18.8 million as of November 30, 2024, consists of $15.0 million on the Domestic Credit Facility and a $3.8 million shareholder loan payable to Sharp Corporation[4] Corporate Developments Key corporate updates including progress on the proposed merger with Gentex and resolution of Nasdaq compliance issues Proposed Merger with Gentex VOXX has secured antitrust clearance in the US and Germany for its proposed merger with Gentex, pending stockholder approval and other closing conditions - The waiting period under the Hart-Scott-Rodino (HSR) Act expired on February 3, 2025, clearing a major U.S. regulatory hurdle[6] - On January 27, 2025, the German Federal Cartel Office advised that the merger could be implemented, providing German regulatory approval[6] - The merger remains subject to other customary closing conditions, including approval by the Company's stockholders[6] SEC Filing and Nasdaq Compliance VOXX filed its delayed Form 10-Q after impairment testing, expecting to regain Nasdaq compliance following a non-compliance notice - The Form 10-Q for the third quarter of fiscal 2025 was filed late due to impairment testing triggered by the December 17, 2025 merger agreement with Gentex[2] - As a result of the late filing, VOXX received a non-compliance notice from Nasdaq on January 28, 2025, for violating Listing Rule 5250(c)(1)[2] - With the filing of the Form 10-Q, the company expects to receive notification from Nasdaq that it has regained compliance[2] Financial Statements Detailed consolidated financial statements, including balance sheets and statements of operations, reflecting the company's financial position and performance Consolidated Balance Sheets Consolidated balance sheet as of November 30, 2024, shows total assets of $338.8 million and total liabilities of $134.3 million, with asset reduction due to impairment charges Consolidated Balance Sheet Summary (in thousands) | Account | Nov 30, 2024 | Feb 29, 2024 | | :--- | :--- | :--- | | Total Current Assets | $202,146 | $235,868 | | Goodwill | $35,385 | $63,931 | | Intangible Assets, net | $38,483 | $68,766 | | Total Assets | $338,826 | $444,006 | | Total Current Liabilities | $109,235 | $96,983 | | Long-term debt, net | $14,478 | $71,881 | | Total Liabilities | $134,271 | $187,706 | | Total Stockholders' Equity | $209,356 | $255,393 | Consolidated Statements of Operations Consolidated statements of operations detail a Q3 FY2025 net loss of $44.0 million and a nine-month net loss of $50.8 million, driven by impairment charges Statement of Operations Summary (in thousands) | Account | Three Months Ended Nov 30, 2024 | Nine Months Ended Nov 30, 2024 | | :--- | :--- | :--- | | Net Sales | $105,175 | $289,324 | | Gross Profit | $22,345 | $70,446 | | Goodwill Impairment Charges | $28,171 | $28,171 | | Intangible Asset Impairment Charges | $16,093 | $16,093 | | Operating Loss | ($54,216) | ($70,460) | | Net Loss Attributable to VOXX | ($43,966) | ($50,823) | | Loss Per Share (Basic & Diluted) | ($1.90) | ($2.20) | Non-GAAP Financial Measures Explanation and reconciliation of non-GAAP financial measures, including EBITDA and Adjusted EBITDA, used to assess core operating performance Definition of Non-GAAP Measures VOXX defines EBITDA and Adjusted EBITDA as supplemental non-GAAP measures, excluding non-cash and non-recurring items for comparable performance assessment - EBITDA is defined as net loss attributable to VOXX before interest expense and bank charges, taxes, and depreciation and amortization[7] - Adjusted EBITDA further excludes items such as stock-based compensation, gains on asset sales, foreign currency fluctuations, restructuring expenses, and impairment charges[7] - The company uses these non-GAAP measures to evaluate performance without the effects of certain non-cash GAAP calculations and to allow for more meaningful period-to-period comparisons[8] Reconciliation of GAAP to Non-GAAP Measures Reconciliation details GAAP net loss to non-GAAP EBITDA and Adjusted EBITDA, showing Q3 FY2025 Adjusted EBITDA loss of $4.7 million and nine-month loss of $10.4 million Reconciliation to Adjusted EBITDA (in thousands) | Description | Three Months Ended Nov 30, 2024 | Nine Months Ended Nov 30, 2024 | | :--- | :--- | :--- | | Net Loss Attributable to VOXX | ($43,966) | ($50,823) | | Interest, Taxes, Depreciation & Amortization | $3,200 | $12,826 | | EBITDA | ($40,766) | ($37,481) | | Goodwill Impairment Charges | $24,985 | $24,985 | | Intangible Asset Impairment Charges | $14,411 | $14,411 | | Gain on Sale of Assets | ($7,299) | ($9,453) | | Gain on Sale of Business | - | ($8,300) | | Other Adjustments | $4,014 | $5,442 | | Adjusted EBITDA | ($4,689) | ($10,396) |