VOXX International Corp (NASDAQ:VOXX) Q1 2020 Earnings Conference Call Transcript

Jul 11, 2019 • 10:00 am ET

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VOXX International Corp (NASDAQ:VOXX) Q1 2020 Earnings Conference Call Transcript

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Presentation
Executive
Patrick M. Lavelle

current inventory, it could continue to lead to not just lower volume, but a delay in certain vehicle launches. Our Q1 results reflect this, as OEM sales were down $8.1 million year-over-year, two vehicle launches were delayed by customers, lower sales at one of our major OEM customers left them with higher inventory and reduced their purchases from us, and finally, another OE dropped passive entry products from their line, though this last piece was accounted for in our budgeting process.

Aftermarket sales were also affected by lower vehicle sales and we're down $1.9 million or just over 11%. Although satellite radio which continues to move to the OE side accounted for more than half of that decline. For VOXX, the decline in the auto market will certainly impact this fiscal year, but long term, this is not a major concern as our position with our OEM customers remain strong.

We're adding new vehicles for our EVO rear-seat entertainment systems and are in discussions with new OEM partners, which if they materialize would positively impact our business in the years ahead. Our efob technology is also making the steady progress and should positively impact next year segment sales. Additionally, the good news from what we are seeing overall is that US buyers are gravitating towards SUV and pickup trucks this year, which is more heavily weighted to our current business model.

On Consumer Electronics segment which consists of our former Premium Audio segment and the Consumer Accessories segment, less EyeLock, they performed well in the first quarter, net sales were up $2.7 million year-over-year in Q1 with Premium Audio product sales up $4.3 million or over 13%. We saw a significant increase in the sale of premium home separate speakers, mobility products and our premium commercial speakers.

The commercial business should be a source of growth this year as we have expanded distribution and see higher volume for our Margaritaville resort projects. Additionally, a few weeks ago, we announced a distribution partnership with SnapAV, becoming their exclusive national custom installation distribution partner for speakers in the United States. Klipsch will join SnapAV's own brand of Episode speakers in their portfolio and will be available for purchase in August, which will start contributing to our performance in the end of Q2, and over the first year, 12 months should generate an additional $10 million in new revenue with growth projected thereafter.

We ran a successful pilot with Dish and the last month just launched on their OnTech Smart Home Services, a new direct-to-consumer smart home solutions brand, where OnTech will provide consumers with professional installation, setup and education for the latest smart home devices and entertainment systems. This new business places Klipsch, as one of the two audio brands on all Dish OnTech trucks providing sound bars and multi room audio, along with a good, better, best passive speaker offering. Our Klipsch One GVA will be going into all trucks beginning in November and will begin contributing to our Q4 results.