Good day and thank for standing by. Welcome to VOXX International’s Fiscal 2021 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will a question-and-answer session. Please be advised that today’s conference is being recorded.

I would now hand the conference to your speaker today, Glenn Wiener, Investor Relations. Please go ahead..

Thank you, Laurie. Good afternoon and welcome to VOXX International’s Fiscal 2021 Fourth Quarter Conference Call. Our Form 10-K was filed with the SEC, our press release announce results was issued as well as this after market closed.

And both documents can be found on the IR section of our website as can our updated investor presentation, which is going to be events and presentation section..

Thank you, Glenn. Good morning, everyone. The momentum that we build throughout the fiscal year carried into our fourth quarter, and we are expecting continued growth and strong profitability and cash flow in fiscal 2022.

Mike will provide more of the financial details but I do want to call out some of the highlights, which provides more color around my business segment commentary.

When comparing our fiscal fourth quarter, net sales were up over 60% gross profit while down on a percentage basis due primarily to the new premium audio distribution agreements we set up was up 13.8 million..

Thanks Pat. Good afternoon, everyone. For quarter net sales were up over 60%. And as Pat noted, all segments grew year-over-year. Automotive segment net sales grew close to 90% with OEM up 11.6% and aftermarket product sales up over 150% principally due to the acquisitions.

Consumer segment net sales were up approximately 50% with premium audio product sales up over 95% and other CE product sales down over 13% primarily due to store closures domestically, as well as in Germany, where we have a significant market presence and accessories or the biometric safe they had a large percentage increase the overall impact was approximately 70,000.

Consolidated gross margins were down 210 basis points. So gross profit dollars increased by 13.8 million. This was principally due to product so for new distribution channels and those through 11TC. Well, these sales carry lower gross margin expenses are also lower to support these programs and it has a positive impact on our bottom line.

Total operating expenses declined by $25.1 million year-over-year. So we had a $30.2 million of intangible asset impairment charges in fiscal 2020 fourth quarter and $1.3 million in fourth quarter of fiscal 2021.

We also had 600,000 of expenses related to VSM in quarter four of fiscal 2020, whereas in fiscal 2021 fourth quarter operating expenses related to both VSM and DEI were $4.6 million, a net change of $4 million. Essentially core overhead was flagged for the comparable periods, excluding the impairment and operating expenses added from acquisitions.

And fiscal 2022 won’t make note that we will have one full-year of DEI expenses, two, a full-year of more normalized employee related expenses. Three more advertising and marketing expenses as trade resumes, though not in the volume of prior years. And of course more travel as the country opens up.

Pat provided bottom line highlights so I will move on to our annual comparisons. We reported a $168.7 million increase in total net sales and similar to the fourth quarter all segments experienced gains year-over-year. The automotive electronics segment had net sales of close to $164 million, up close to $50 million or over 43%.

OEM sales were down approximately 3.5 million. Due to all of the plant closures Pat discussed, and the aftermarket product sales increased by more than 53 million due to the acquisitions and in spite of store closures around the country. Our consumer electronics segment add net sales up over 398 million up close to 119 million or 42%.

Similar to my fourth quarter comments, premium audio was up significantly over 75%. With other CD product sales just under 10. Biometric segments net sales were approximately 400,000 year-over-year. Consolidated gross margins were 28.1% up 30 basis points.

Automotive segment gross margins increased 370 basis points, CE segment gross margins declined by 120 basis points, and the volumetric segment gross margins were negative for both periods.

The VSM and DEI acquisitions positively impact the gross margins due to the mix of products sold through lower - due to lower OEM, risk of enterprises again, mostly due to plant closures potentially offsetting higher gains.

Also note sales to 11TC carry lower gross margins, but positively contributed to the year-over-year increase in gross profit dollars.

Total operating expenses of 136.1 million were down 24 million year-over-year, they were up roughly 4.9 million excluding the intangible asset impairment charges with 13.6 million or higher expenses due to the acquisitions. We have significantly lowered our overhead during the early stages of COVID.

And in the second half of the year gradually added back expenses related to headcount, furloughs, and TNE. As people return to work, and as some of the major shows resumed operations, we anticipate higher expenses accordingly. With that in mind, we are always looking to drive efficiencies and reduce costs where we can.

With other income in fiscal 2021, we reported other income of 5.2 million compared to 9.4 million in fiscal 2020. There were some offsetting factors, but the major variances the 4.1 million gain we recorded related to the sale of our facility in Germany, in prior fiscal year.

ASA, our 50:50 joint venture reported a 2.2 million year-over-year increase, which was partially offset by foreign exchange gains and losses for comparable periods as noted in our form 10-K. As Pat provided operating and net income and adjusted EBITDA comparisons, I will move on with a few comments related to our balance sheet.

We ended the fiscal year with 59.4 million in cash and cash equivalents of 22 million compared to the end of fiscal 20. Note, we use cash of 11 million this past fiscal year to fund DEI acquisitions, which closed on July 1 2020.

Note the VSM acquisition, which we had discussed was in our fourth quarter of fiscal 2020 and close on January 31, 2020, that at a cash purchase price of 16.5 million. Our total deposition was 7.1 million or 8.2 million for the same periods, respectively.

Our total long-term debt was debt issuance costs was six million as of February 28, 2020, compared to 6.1 million at fiscal 2020 year-end. Buying acquisitions or any major shifts in our business and the world. We anticipate our cash position will increase in fiscal 2022. We have sufficient working capital and our balance sheet remains strong.

That concludes my remarks and operator we are ready to open up the call for questions..

. And we have a question from (Ph), a Private Investor. Your line is open..

I would like to understand the accounting treatment of the proposed or proposed accounting treatment of the proposal distribution agreement with EyeLock and would it appear, how would it get translated into the various balance sheet items?.

So, first of all, it is a standalone agreement, anything that they purchase would be both as a sales and gross profit recorded, would be recorded in EyeLock’s books..

Okay.

But what about the put and call agreement? How would they be reflected?.

The put and call is, first of all, put and call, other than for a sale or an IPO or anything like that, would not happen in the first two years of the agreement. I would have to ask our accounting department how they are treating the put and call on the books.

There will be evaluation that is done, that will deal with that and that will be in the details on our proxy..

At this point, as Pat mentioned, the transaction put and call and the transaction itself is going through fairness opinion, which we are working on at this time. But as for the balance sheet, they would probably basically say neutral, but we are just looking at the accounting treatment as we speak, in reference to that put and call.

The real impact on the balance sheet and P&L for that operation is the distribution agreement itself, which holds the company with a minimum of $5 million in what is considered paid..

Right. I mean, so that, you are guaranteed at least a gross margin of $5 million per year, at least for two years until the options become exercisable I suppose..

That is correct. And as Pat mentioned, because of the strength of the team that is joining, we feel that, that is going to give us more market potential..

Okay. Understood. Thank you for that. If there is time, I would like to ask another question relating to the automotive segment as well..

Sure..

I would just like to understand what are the types of products that are being sold by VSM to the trucking companies that you mentioned Navistar - and/or whatever?.

Primary products that we sell to VSM are heavy-duty turn signals for trucks, okay and certain lighting..

Okay. Understood. And yet, another question since I’m very interested in VOXX. What about the infotainment system? Is your supply chain affected at all by the widespread news of shortage in the auto or as you said you have made agreements in advance for various parts anyway.

But generally, it is my understanding correct that the electronics, the chips that are used for the infotainment systems. They are typically more consumer type chips, and they are not the automotive type..

These are - in order to be on the OEM, these are automotive grade chips that work in an automotive environment. But we have secured enough chips to launch the product and price the land is pretty much on target as far as the launch the first vehicle that will come out with their new grand in the year.

And we have secured enough boards for it get us through that launch and supply additional products for the year..

Okay. Thanks for entertaining my questions. Thank you very much..

Welcome Matt..

We have a question from ..

I’m a long-term shareholder. I’m in Florida, and I see our products in Costco all the time. And they are giving you a lot of shelf space. My question is, so for the last couple of calls, you have mentioned the medical devices, medical devices with EyeLock.

Is that what you referred for when you finally said something about it, because you have never - you have mentioned it, but there is never been any information around it.

So this is what we are looking forward to?.

Yes, what we are looking forward there is we have won an award that will incorporate the EyeLock Technology into certain healthcare products that are supplied by a major worldwide healthcare provider as far as manufacturing, and we are under NDA with tonight goals, what the product is or who is for.

But we are in the process of integrating our technology into their new lineup of products that for the most part. We will have limited launch in 2023 was a targeted general launch towards the end of the year. These are very sophisticated machines, and they are quite expensive design for hospitals.

So this is an award that we think not only generates revenue for us, but really validates our technology within the healthcare space..

Thank you. Sounds great. Keep up the good work..

Thank you..

. There are no further questions. On to you presenters, you may continue..

Okay. Well, I know this is unusual that we have our call is late. So I’m sure that everybody wants to get home. If there are no further questions, I want to thank you for your interest in VOXX and wish you a nice evening..

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect..