VOXX International (VOXX) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the fourth quarter, net sales declined by $6.4 million, with Automotive Electronics segment sales down $9.3 million, offset by a $3.1 million increase in Consumer Electronics [22] - For the fiscal year, net sales were $394.9 million, down $52 million, primarily due to a $47.5 million decline in the Automotive Electronics segment [23] - Gross margins for the fourth quarter increased to 28.2%, up 610 basis points year-over-year, while annual gross margins were 27.8%, up 60 basis points compared to the previous year [25][26] - The company reported an operating loss of $34.7 million for the fourth quarter, which would have been $4.5 million excluding noncash impairment charges [27] Business Line Data and Key Metrics Changes - The Automotive Electronics segment faced significant challenges, with sales down $47 million due to delays in Ford and GM programs and a decline in Subaru sales [8][23] - The Consumer Electronics segment saw a slight decline of over 1% for the year, but gross margins improved by 200 basis points, leading to a pretax income of $9.4 million compared to a loss of $29.3 million in the previous fiscal year [12][24] - The Biometrics segment faced delays due to COVID-19, but interest in EyeLock's technology has increased, particularly for touchless solutions [17][18] Market Data and Key Metrics Changes - The company noted that e-commerce sales for Consumer Electronics products performed well during the pandemic, helping to offset some losses [21] - The automotive market is expected to see a slow start in fiscal '21 due to lower vehicle sales, but volume is anticipated to pick up in the second half of the year [11] Company Strategy and Development Direction - The company is focused on realigning its business to improve margins, lower expenses, and enhance shareholder value, including restructuring its domestic accessory business and consolidating international operations [6][7] - New partnerships and product launches are expected to drive growth, particularly in the Automotive and Consumer Electronics segments [10][14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about returning to profitability in fiscal '21, contingent on the recovery from COVID-19 and the successful launch of new products and programs [20] - The company is actively managing costs and has implemented significant overhead reductions in response to the pandemic [21][91] Other Important Information - The company engaged an investment banker to explore strategic alternatives for EyeLock, including potential partnerships or an IPO [19] - The balance sheet remains strong, with cash and cash equivalents at $37.4 million as of February 29, 2020, despite a decrease from the previous year [34] Q&A Session Summary Question: Did the company pay $16 million in cash to buy Vehicle Safety? - Yes, the company confirmed the acquisition cost [40] Question: Is Vehicle Safety expected to earn a 10% return on the cash invested? - Management indicated that Vehicle Safety is profitable and the acquisition will enhance overall margins [41] Question: What is the current status of EyeLock and its potential for an IPO? - Management acknowledged delays due to COVID-19 but expressed confidence in the interest surrounding EyeLock's technology [45] Question: Are there any updates on the SiriusXM contract with EyeLock? - The program is still ongoing but has faced delays due to COVID-19 [80] Question: Why is the company not more aggressive with its stock buyback program? - Management believes there are better long-term opportunities for capital use than immediate stock buybacks [94]