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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended August 31, 2021

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 0-28839

 

VOXX International Corporation

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of

incorporation or organization)

 

13-1964841

(IRS Employer Identification No.)

2351 J Lawson Blvd., Orlando, Florida

(Address of principal executive offices)

 

32824

(Zip Code)

 

 

 

(800645-7750

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:

Trading Symbol:

Name of Each Exchange on which Registered

Class A Common Stock $.01 par value

VOXX

The Nasdaq Stock Market LLC

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Number of shares of each class of the issuer's common stock outstanding as of the latest practicable date.

 

Class

 

As of October 8, 2021

Class A Common Stock

 

21,614,629 Shares

Class B Common Stock

 

2,260,954 Shares

 

 

 


 

 

VOXX International Corporation and Subsidiaries

Table of Contents

 

 

 

 

 

Page

PART I

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1

 

FINANCIAL STATEMENTS

 

 

 

 

Consolidated Balance Sheets at August 31, 2021 (unaudited) and February 28, 2021

 

3

 

 

Unaudited Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended August 31, 2021 and 2020

 

4

 

 

Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended August 31, 2021 and 2020

 

5

 

 

Unaudited Consolidated Statements of Cash Flows for the Six Months Ended August 31, 2021 and 2020

 

6

 

 

Notes to Unaudited Consolidated Financial Statements

 

7

Item 2

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

30

Item 3

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

43

Item 4

 

CONTROLS AND PROCEDURES

 

43

 

 

 

 

 

PART II

 

OTHER INFORMATION

 

 

 

 

 

 

 

Item 1

 

LEGAL PROCEEDINGS

 

44

Item 1A

 

RISK FACTORS

 

44

Item 2

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

44

Item 6

 

EXHIBITS

 

45

SIGNATURES

 

46

 

 

 

 

2


 

 

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

VOXX International Corporation and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

 

 

 

August 31,

2021

 

 

February 28,

2021

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

41,051

 

 

$

59,404

 

Accounts receivable, net

 

 

90,346

 

 

 

106,165

 

Inventory

 

 

145,711

 

 

 

130,793

 

Receivables from vendors

 

 

362

 

 

 

277

 

Due from Onkyo (see Note 2)

 

 

8,390

 

 

 

 

Prepaid expenses and other current assets

 

 

24,149

 

 

 

22,266

 

Income tax receivable

 

 

435

 

 

 

434

 

Total current assets

 

 

310,444

 

 

 

319,339

 

Investment securities

 

 

1,544

 

 

 

1,777

 

Equity investment

 

 

22,457

 

 

 

23,267

 

Property, plant and equipment, net

 

 

51,022

 

 

 

52,026

 

Operating lease, right of use asset

 

 

4,309

 

 

 

4,572

 

Goodwill

 

 

56,958

 

 

 

58,311

 

Intangible assets, net

 

 

87,192

 

 

 

90,104

 

Deferred income tax assets

 

 

98

 

 

 

99

 

Other assets

 

 

798

 

 

 

1,323

 

Total assets

 

$

534,822

 

 

$

550,818

 

Liabilities, Redeemable Equity, and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

58,006

 

 

$

61,826

 

Accrued expenses and other current liabilities

 

 

47,742

 

 

 

53,392

 

Income taxes payable

 

 

1,390

 

 

 

1,587

 

Accrued sales incentives

 

 

21,648

 

 

 

25,313

 

Contract liabilities, current

 

 

3,698

 

 

 

4,178

 

Current portion of long-term debt

 

 

1,328

 

 

 

500

 

Total current liabilities

 

 

133,812

 

 

 

146,796

 

Long-term debt, net of debt issuance costs

 

 

5,192

 

 

 

5,962

 

Finance lease liabilities, less current portion

 

 

155

 

 

 

302

 

Operating lease liabilities, less current portion

 

 

3,327

 

 

 

3,582

 

Deferred compensation

 

 

1,544

 

 

 

1,777

 

Deferred income tax liabilities

 

 

6,910

 

 

 

6,645

 

Other tax liabilities

 

 

1,007

 

 

 

1,170

 

Other long-term liabilities

 

 

4,701

 

 

 

5,255

 

Total liabilities

 

 

156,648

 

 

 

171,489

 

Commitments and contingencies (see Note 24)

 

 

 

 

 

 

 

 

Redeemable equity (see Note 8)

 

 

3,345

 

 

 

3,260

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock:

 

 

 

 

 

 

 

 

No shares issued or outstanding (see Note 20)

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

 

 

Class A, $.01 par value, 60,000,000 shares authorized, 24,476,847 and 24,416,194 shares issued and 21,614,629 and 21,666,976 shares outstanding at August 31, 2021 and February 28, 2021, respectively

 

 

245

 

 

 

245

 

Class B Convertible, $.01 par value, 10,000,000 shares authorized, 2,260,954 shares issued and outstanding at both August 31, 2021 and February 28, 2021

 

 

22

 

 

 

22

 

Paid-in capital

 

 

300,019

 

 

 

300,402

 

Retained earnings

 

 

151,933

 

 

 

148,906

 

Accumulated other comprehensive loss

 

 

(15,634

)

 

 

(14,977

)

Less: Treasury stock, at cost, 2,862,218 and 2,749,218 shares of Class A Common Stock at August 31, 2021 and February 28, 2021, respectively

 

 

(25,138

)

 

 

(23,918

)

Less: Redeemable equity

 

 

(3,345

)

 

 

(3,260

)

Total VOXX International Corporation stockholders' equity

 

 

408,102

 

 

 

407,420

 

Non-controlling interest

 

 

(33,273

)

 

 

(31,351

)

Total stockholders' equity

 

 

374,829

 

 

 

376,069

 

Total liabilities, redeemable equity, and stockholders' equity

 

$

534,822

 

 

$

550,818

 

See accompanying notes to unaudited consolidated financial statements.

 

3


 

 

VOXX International Corporation and Subsidiaries

Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income

(In thousands, except share and per share data)

 

 

 

Three months ended

August 31,

 

 

Six months ended

August 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net sales

 

$

143,109

 

 

$

128,032

 

 

$

280,169

 

 

$

200,019

 

Cost of sales

 

 

105,923

 

 

 

89,956

 

 

 

206,288

 

 

 

141,968

 

Gross profit

 

 

37,186

 

 

 

38,076

 

 

 

73,881

 

 

 

58,051

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling

 

 

11,838

 

 

 

9,233

 

 

 

23,305

 

 

 

17,801

 

General and administrative

 

 

17,884

 

 

 

15,424

 

 

 

36,560

 

 

 

30,294

 

Engineering and technical support

 

 

7,886

 

 

 

4,781

 

 

 

14,118

 

 

 

9,266

 

Acquisition costs

 

 

2,316

 

 

 

121

 

 

 

2,992

 

 

 

246

 

Total operating expenses

 

 

39,924

 

 

 

29,559

 

 

 

76,975

 

 

 

57,607

 

Operating (loss) income

 

 

(2,738

)

 

 

8,517

 

 

 

(3,094

)

 

 

444

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and bank charges

 

 

(582

)

 

 

(1,010

)

 

 

(1,110

)

 

 

(1,809

)

Equity in income of equity investee

 

 

2,035

 

 

 

1,883

 

 

 

4,758

 

 

 

2,745

 

Other, net

 

 

376

 

 

 

(226

)

 

 

818

 

 

 

460

 

Total other income, net

 

 

1,829

 

 

 

647

 

 

 

4,466

 

 

 

1,396

 

(Loss) income before income taxes

 

 

(909

)

 

 

9,164

 

 

 

1,372

 

 

 

1,840

 

Income tax (benefit) expense

 

 

(217

)

 

 

2,609

 

 

 

267

 

 

 

4,390

 

Net (loss) income

 

 

(692

)

 

 

6,555

 

 

 

1,105

 

 

 

(2,550

)

Less: net loss attributable to non-controlling interest

 

 

(1,003

)

 

 

(785

)

 

 

(1,922

)

 

 

(1,618

)

Net income (loss) attributable to VOXX International Corporation

 

$

311

 

 

$

7,340

 

 

$

3,027

 

 

$

(932

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(1,334

)

 

 

3,025

 

 

 

(962

)

 

 

3,529

 

Derivatives designated for hedging

 

 

163

 

 

 

(294

)

 

 

282

 

 

 

(471

)

Pension plan adjustments

 

 

22

 

 

 

(65

)

 

 

23

 

 

 

(79

)

Other comprehensive (loss) income, net of tax

 

 

(1,149

)

 

 

2,666

 

 

 

(657

)

 

 

2,979

 

Comprehensive (loss) income attributable to VOXX International Corporation

 

$

(838

)

 

$

10,006

 

 

$

2,370

 

 

$

2,047

 

Income (loss) per share - basic: Attributable to VOXX International Corporation

 

$

0.01

 

 

$

0.30

 

 

$

0.12

 

 

$

(0.04

)

Income (loss) per share - diluted: Attributable to VOXX International Corporation

 

$

0.01

 

 

$

0.30

 

 

$

0.12

 

 

$

(0.04

)

Weighted-average common shares outstanding (basic)

 

 

24,281,220

 

 

 

24,224,478

 

 

 

24,273,731

 

 

 

24,223,935

 

Weighted-average common shares outstanding (diluted)

 

 

24,855,307

 

 

 

24,552,064

 

 

 

24,890,641

 

 

 

24,223,935

 

 

See accompanying notes to unaudited consolidated financial statements.

4


 

VOXX International Corporation and Subsidiaries

Unaudited Consolidated Statements of Stockholders' Equity

For the three and six months ended August 31, 2021 and 2020

(In thousands, except share and per share data)

 

 

 

Class A

and Class B

Common

Stock

 

 

Paid-in

Capital

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Loss

 

 

Non-

controlling

Interests

 

 

Treasury

Stock

 

 

Redeemable Equity

 

 

Total

Stock-

holders'

Equity

 

Balances at February 28, 2021

 

$

267

 

 

$

300,402

 

 

$

148,906

 

 

$

(14,977

)

 

$

(31,351

)

 

$

(23,918

)

 

$

(3,260

)

 

$

376,069

 

Net income (loss)

 

 

 

 

 

 

 

 

2,716

 

 

 

 

 

 

(919

)

 

 

 

 

 

 

 

 

1,797

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

492

 

 

 

 

 

 

 

 

 

 

 

 

492

 

Net settlement of 60,693 shares of common stock upon vesting of stock awards

 

 

 

 

 

(856

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(856

)

Stock-based compensation expense

 

 

 

 

 

236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34

 

 

 

270

 

Balances at May 31, 2021

 

 

267

 

 

 

299,782

 

 

 

151,622

 

 

 

(14,485

)

 

 

(32,270

)

 

 

(23,918

)

 

 

(3,226

)

 

 

377,772

 

Net income (loss)

 

 

 

 

 

 

 

 

311

 

 

 

 

 

 

(1,003

)

 

 

 

 

 

 

 

 

(692

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

(1,149

)

 

 

 

 

 

 

 

 

 

 

 

(1,149

)

Repurchase of 113,000 shares of Class A common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,220

)

 

 

 

 

 

(1,220

)

Stock-based compensation expense

 

 

 

 

 

237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(119

)

 

 

118

 

Balances at August 31, 2021

 

 

267

 

 

 

300,019

 

 

 

151,933

 

 

 

(15,634

)

 

 

(33,273

)

 

 

(25,138

)

 

 

(3,345

)

 

 

374,829

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at February 29, 2020

 

$

266

 

 

$

299,228

 

 

$

122,139

 

 

$

(19,055

)

 

$

(27,950

)

 

$

(23,918

)

 

$

(2,481

)

 

$

348,229

 

Net loss

 

 

 

 

 

 

 

 

(8,272

)

 

 

 

 

 

(833

)

 

 

 

 

 

 

 

 

(9,105

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

313

 

 

 

 

 

 

 

 

 

 

 

 

313

 

Stock-based compensation expense

 

 

1

 

 

 

351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(201

)

 

 

151

 

Balances at May 31, 2020

 

 

267

 

 

 

299,579

 

 

 

113,867

 

 

 

(18,742

)

 

 

(28,783

)

 

 

(23,918

)

 

 

(2,682

)

 

 

339,588

 

Net income (loss)

 

 

 

 

 

 

 

 

7,340

 

 

 

 

 

 

(785

)

 

 

 

 

 

 

 

 

6,555

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

2,666