VOXX International Corp (NASDAQ:VOXX) Q2 2020 Earnings Conference Call - Final Transcript

Oct 11, 2019 • 10:00 am ET


VOXX International Corp (NASDAQ:VOXX) Q2 2020 Earnings Conference Call - Final Transcript


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Patrick M. Lavelle

and down 1.25% in the US year-to-date; and two, the timing of end-of-life and the start of new programs. We do not believe this will be a long-term trend; however, given recent awards that we've received from our OEM customers.

For the second quarter comparisons, consolidated net sales declined by $18.6 million and of this over 70% of the decline within our Automotive segment, which has historically been one of our more consistent, stable and profitable segments. We are expecting Automotive sales to be down year-over-year that was communicated previously and our near-term outlook has not changed. However, as we look out over the next few years, we believe this segment will be one of the key growth drivers for our business. During the second quarter, VOXX Automotive was awarded the next-generation RSE program, that's rear-seat entertainment program, with one of the big three US automakers. This program will launch in calendar year 2021 on model-year 2022 vehicles and has a total value of approximately $275 million over a five-year period. In addition, Nissan awarded us another RSE program for the Armada slated to begin in August of 2020, which will run for two years. We will be launching a new RSE program for the Lincoln Aviator this quarter and we believe -- and we've recently added new business with Ford for the Expedition XLT, which will begin mid-year in 2020. There are number of other programs that have been in development, which are nearing final stages of testing and evaluation and based on what we have won and what is in the pipeline, our Automotive Electronics segment could be poised for growth towards the end of fiscal 2021 and significant growth in fiscal 2022, which would be sustainable based on the long-term nature of the programs. This is what is driving our optimism.

On our Consumer Electronics segment, they posted a sales decline of $5.3 million due to the softness in the European market and declines in domestic accessories. Regarding the domestic business, sales were down $1.8 million due in part to the SKU rationalization program and the discontinuance of several products, which we had discussed previously. However, our domestic business outperformed our budget, both in the second quarter and year-to-date and we continue to show year-over-year growth in the wearable category based on our position as a distributor of Apple, Samsung, Garmin, Fitbit and Striiv activity trackers. During the second half of the year, we will be expanding distribution of reception, connectivity and power products to new countries in the APAC region and launching new products in the remote control, karaoke, antenna and audio categories. We are actively managing inventory, reducing our risk and focusing on products that have better margin structures and are more sustainable life cycles, consistent with the strategy I outlined on our past two calls.

Our domestic premium audio business was down modestly compared to last year's second quarter, which was a strong quarter for that group. A positive when you consider that we