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voxx-10q_20211130.htm

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 November 30, 2021


☐	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)

(800) 645-7750 (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 January 7, 2022
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 November 30, 2021 (unaudited) and February 28, 2021	3
	Unaudited Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended November 30, 2021 and 2020	4
	Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended November 30, 2021 and 2020	5
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended November 30, 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	33
Item 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	47
Item 4	CONTROLS AND PROCEDURES	47

PART II	OTHER INFORMATION

Item 1	LEGAL PROCEEDINGS	48
Item 1A	RISK FACTORS	48
Item 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	48
Item 6	EXHIBITS	49
SIGNATURES		50

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VOXX International Corporation and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

	November 30, 2021			February 28, 2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	21,162		$	59,404
Accounts receivable, net		131,811			106,165
Inventory		166,361			130,793
Receivables from vendors		398			277
Prepaid expenses and other current assets		24,935			22,266
Income tax receivable		431			434
Total current assets		345,098			319,339
Investment securities		1,440			1,777
Equity investment		22,628			23,267
Property, plant and equipment, net		50,692			52,026
Operating lease, right of use asset		4,010			4,572
Goodwill		66,913			58,311
Intangible assets, net		111,293			90,104
Deferred income tax assets		95			99
Other assets		946			1,323
Total assets	$	603,115		$	550,818
Liabilities, Redeemable Equity, Redeemable Non-Controlling Interest, and Stockholders' Equity
Current liabilities:
Accounts payable	$	78,274		$	61,826
Accrued expenses and other current liabilities		64,782			53,392
Income taxes payable		1,172			1,587
Accrued sales incentives		31,450			25,313
Interim arbitration award payable (see Note 24)		39,444			—
Contract liabilities, current		3,713			4,178
Current portion of long-term debt		2,091			500
Total current liabilities		220,926			146,796
Long-term debt, net of debt issuance costs		9,925			5,962
Finance lease liabilities, less current portion		117			302
Operating lease liabilities, less current portion		3,073			3,582
Deferred compensation		1,440			1,777
Contingent consideration, less current portion (see Note 2)		5,582			—
Deferred income tax liabilities		6,128			6,645
Other tax liabilities		1,002			1,170
Other long-term liabilities		5,790			5,255
Total liabilities		253,983			171,489
Commitments and contingencies (see Note 24)
Redeemable equity (see Note 8)		3,448			3,260
Redeemable non-controlling interest (see Note 2)		1,355			—
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 November 30, 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 November 30, 2021 and February 28, 2021		22			22
Paid-in capital		300,240			300,402
Retained earnings		123,812			148,906
Accumulated other comprehensive loss		(17,249	)		(14,977	)
Less: Treasury stock, at cost, 2,862,218 and 2,749,218 shares of Class A Common Stock at November 31, 2021 and February 28, 2021, respectively		(25,138	)		(23,918	)
Less: Redeemable equity		(3,448	)		(3,260	)
Total VOXX International Corporation stockholders' equity		378,484			407,420
Non-controlling interest		(34,155	)		(31,351	)
Total stockholders' equity		344,329			376,069
Total liabilities, redeemable equity, redeemable non-controlling interest, and stockholders' equity	$	603,115		$	550,818

See accompanying notes to unaudited consolidated financial statements.

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 November 30,						Nine months ended November 30,
	2021			2020			2021			2020
Net sales	$	191,871		$	201,065		$	472,040		$	401,084
Cost of sales		140,167			142,937			346,455			284,905
Gross profit		51,704			58,128			125,585			116,179
Operating expenses:
Selling		13,864			13,176			37,169			30,976
General and administrative		20,049			21,104			56,609			51,398
Engineering and technical support		9,706			5,676			23,824			14,942
Acquisition costs		287			24			3,279			270
Total operating expenses		43,906			39,980			120,881			97,586
Operating income		7,798			18,148			4,704			18,593
Other (expense) income:
Interest and bank charges		(730	)		(471	)		(1,840	)		(2,280	)
Equity in income of equity investee		2,206			1,761			6,964			4,506
Interim arbitration award (see Note 24)		(39,444	)		—			(39,444	)		—
Investment gain (see Note 4)		—			42			—			42
Other, net		(143	)		294			675			753
Total other (expense) income, net		(38,111	)		1,626			(33,645	)		3,021
(Loss) income before income taxes		(30,313	)		19,774			(28,941	)		21,614
Income tax (benefit) expense		(641	)		2,334			(374	)		6,724
Net (loss) income		(29,672	)		17,440			(28,567	)		14,890
Less: net loss attributable to non-controlling interest		(1,551	)		(811	)		(3,473	)		(2,429	)
Net (loss) income attributable to VOXX International Corporation	$	(28,121	)	$	18,251		$	(25,094	)	$	17,319
Other comprehensive income (loss):
Foreign currency translation adjustments		(1,835	)		79			(2,797	)		3,608
Derivatives designated for hedging		184			(43	)		466			(514	)
Pension plan adjustments		36			(6	)		59			(85	)
Other comprehensive (loss) income, net of tax		(1,615	)		30			(2,272	)		3,009
Comprehensive (loss) income attributable to VOXX International Corporation	$	(29,736	)	$	18,281		$	(27,366	)	$	20,328
(Loss) income per share - basic: Attributable to VOXX International Corporation	$	(1.16	)	$	0.75		$	(1.03	)	$	0.72
(Loss) income per share - diluted: Attributable to VOXX International Corporation	$	(1.16	)	$	0.74		$	(1.03	)	$	0.71
Weighted-average common shares outstanding (basic)		24,289,909			24,197,786			24,279,084			24,196,393
Weighted-average common shares outstanding (diluted)		24,289,909			24,677,525			24,279,084			24,532,329

See accompanying notes to unaudited consolidated financial statements.

VOXX International Corporation and Subsidiaries

Unaudited Consolidated Statements of Stockholders' Equity

For the three and nine months ended November 30, 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 loss, 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
Net loss		—		—			(28,121	)		—			(882	)		—			—			(29,003	)
Other comprehensive loss, net of tax		—		—			—			(1,615	)		—			—			—			(1,615	)
Stock-based compensation expense		—		221			—			—			—			—			(103	)		118
Balances at November 30, 2021	$	267	$	300,240		$	123,812		$	(17,249	)	$	(34,155	)	$	(25,138	)	$	(3,448	)	$	344,329