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Jefferies Consumer Conference June 23-24, 2015
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About VOXX International Corporation
Founded in 1965 as Audiovox Corporation Publicly traded on the Nasdaq Stock Market under the ticker symbol “VOXX” Global manufacturer and distributor of lifestyle products to consumers Leading market positions in Automotive, Premium Audio and Consumer Accessories Strategic supplier to many of the world’s largest Tier-1 OEMs and leading retailers Increased manufacturing and R&D capabilities driven by commitment to innovation Growing global portfolio of well-known and trusted consumer brands Strong balance sheet and cash flow generation Positioned for organic growth and improved bottom-line performance in the years ahead Seasoned management team with 100+ years of combined industry experience
John Shalam Chairman
Pat Lavelle President and CEO
Michael Stoehr EVP and CFO
Ludwig Geis President,
VOXXHirschmann
Paul Jacobs CEO, Klipsch
Group
David Geise President, VAC
Tom Malone President, VEC
Mark Finger MD/CEO, VOXX
Germany
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Business Segments and Product Offering
Premium Audio
Consumer Accessories
Automotive
Rear-Seat Entertainment
Digital TV Tuners
Mobile Antennas
Asset Tracking
Mobile Multimedia Devices
Automotive Security
Remote Start Systems
Smartphone Telematics
Collision Avoidance Systems
Lane Departure Systems
Location-Based Services
Satellite Radio Products
Action Cameras
Biometrics/Personal Security
Music Systems (Singtrix)
Universal Remote Controls
Reception Products
Indoor Bluetooth Speakers
Outdoor Bluetooth Speakers
iPod Docks/iPod Sound
A/V Connectivity
Portable/Home Charging
Rechargeable Battery Packs
Digital Consumer Products
High-End Loudspeakers
Soundbars & Soundbases
Headphones
Music Centers
Home Theater Systems
Bluetooth Speakers
Outdoor Speakers
iPod/Computer Speakers
Business Music Systems
Cinema Speakers
Flat Panel Speakers
Digital Living Network Alliance (DLNA)
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Automotive Segment Overview
Manufacture and distribute a wide array of mobile electronics products for global OEMs and in the aftermarket through our nationwide and worldwide distribution channels
Three manufacturing facilities, with over 220 engineers supporting new and future OEM programs Hold #1 positions in installed rear-seat entertainment (domestic), remote start systems (domestic),
aftermarket satellite radio (domestic), and automotive digital TV tuners (global); one of the top 3 suppliers of automotive antennas (global, with AT&T as our partner)
Developing next generation technologies that bridge the gap between content, devices and connectivity
$291.2
$416.6 $412.5 $396.4
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
FY12 FY13 FY14
Increased focus on OEM market
Transitioning product portfolio
Declining satellite radio business offsetting gains in other areas
New products and technologies to fuel FY16 growth and beyond
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Automotive Segment
Growing OEM Platform
2002 – Acquired assets of Code Systems, Inc., an automotive security product company.
2012: Acquired Hirschmann Car Communication, a global market leader supplying antennas and digital tuners.
2007 – Acquired assets of Incaar Limited, a manufacturer of rear-seat electronic systems.
2010: Acquired Invision Automotive Systems, a leading domestic manufacturer of rear-seat entertainment systems.
Combination of OEM groups - Hirschmann Car Communications®, Audiovox Incaar®, Code Alarm® and Invision®
Significantly strengthens our tier-1 status as a global manufacturer (facilities in Hungary, Germany and the U.S.)
Over 220 engineers on staff; opportunity to share and leverage resources across R&D, sales and marketing
Over $480 million in new contracts awarded since Hirschmann Car Communications was acquired in 2012
Several large scale RFQs in process and pending, based on new technologies from VOXXHirschmann
Expanding OEM customer relationships in the U.S. and throughout Europe,
driven by prior acquisitions and investments in new technology solutions
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Worldwide Sales/Design/Manufacturing Facilities
Detroit
• Product Dev &
CRM
– Antenna-Design
– Mechanical-
Design
– Hardware
– Software
• Test & Validation
Orlando
• Product Dev & CRM
• Mechanical-Design
• Application Engineering
• Test & Validation
• Manufacturing & SCM
Long
Beach
• Hardware
• Software
• Test
Nuremberg
• Development
– Hardware
– Software
– SW-Quality
Fulda
• Hardware
• Software
• Test
Beckum
• Development
– Software
Paris
• Product Dev & CRM
– Application
Engineering
Seoul
• Representative
Office
Juarez
• Manufacturing
Partnership
Békéscsaba
• Manufacturing
Shanghai
• Product Development &
CRM
– Antenna-Design
– Mechanical-Design
– Hardware
– Software
• Manufacturing
• Test
Tokyo
• Representative Office
• Test
Neckartenzlingen
• Product Dev & CRM
– Antenna-Design
– Mechanical-
Design
– Hardware
– Software
• Manufacturing
• Test & Validation
Automotive Segment
Broad Global Footprint
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Vehicle Production – Tier 1 and Tier 2
• Delivered products: antenna,
tuners and RSE
• Premier customers . . .
… on the Production Line
Post Production – 2nd Stage Mfg, Mod Center, VPC and Ports
• Delivered products:
remote access and RSE
• Premier customers . . .
… at the Mod Center and Ports
Dealer Direct – Parts Distribution and Accessories
• Logistics, warehousing,
distribution and billing
• Premier customers . . .
… at the Dealership
BMW Group
Automotive Segment
OEM Support at Every Level
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Automotive Segment
Enabling the “Connected Life”
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Automotive Segment
New Product Innovation to Drive Growth
• New multi-digital tuner modules
• New smart antenna systems and asset-based tracking
• New eHub solution
• New Android-based, rear-seat entertainment systems
• New DVBT-2 digital tuners
Integrated Tuner Antenna Systems
eHub Next Gen DVBT-2 Digital Tuner
Rear-seat Entertainment Smart Antenna Systems
Anticipated growth in new and used car sales / more wireless technologies moving into the car / content sharing and streaming functionality driven by consumers
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Premium Audio Segment
We design, manufacture and distribute premium, high-end audio systems for the “audiophile” through our nationwide and global distribution network
Leading Market Positions
#1 in surround sound (domestic)
#1 in premium home theater (domestic)
#1 market position at big box retailers (domestic)
#1 unit supplier of home audio speaker systems (Germany)
Expanding soundbar and soundbase product offerings
Continued emphasis on product development
*Opportunities to expand in the CEDIA channel
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Premium Audio Segment
“In-the-Home”
Company holds the #1 market share position in surround sound systems and introduced the first 2.1 Premium Audio system with streaming at CES 2014
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Premium Audio Segment
“On-the-Go”
Company consistently ranks among the top selling headphones for
high-quality audio performance (in-ear and on-ear)
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Premium Audio Segment
Professional and Commercial Installation
U.S. U.S. U.S. Mexico U.S. Europe China
Klipsch Cinema and Stage Systems Wide Assortment of Professional Speakers
Stable presence in the commercial and professional markets with an eye on growth, fueled by an uptick in the domestic economy and global cinema markets
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Premium Audio Segment
New Reference Series to Drive Profitability
Strategy to transition older inventory to make way for new Reference Series
results in improvements in gross margins and should fuel growth
Klipsch Debuts Flagship Reference Premiere Speakers and WiSA Enabled Reference Premiere Wireless Home Theater Speakers at CES 2015
Klipsch Reference Premiere Floorstanding Speakers produce cinematic sound from Cerametallic™ woofers and a Hybrid Tractrix® Horn. They can fill your room with theater-quality sound with minimal effort - immersing you in the ultimate listening experience.
The new Klipsch Reference Floorstanding speakers deliver a legendary, powerful sonic signature at an affordable price. These Reference Series speakers capture every detail and bring movies and music to life using our exclusive Tractrix Horn technology, Linear Travel Suspension (LTS) tweeters, and Injection Molded Graphite (IMG) woofers.
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Premium Audio Segment
Jamo Products
A diverse line of Premium Audio Sound products under the Jamo brand…
Floor speakers, soundbars, subwoofers and custom installation products
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Consumer Accessories Segment
Leading Market Positions
#1 in TV remote controls (domestic)
#1 in TV reception products (domestic)
#1 in wireless outdoor speakers (domestic)
Top and growing supplier of power products (domestic)
Rapidly growing Bluetooth speaker market share (global)
Dominant accessories company (worldwide)
We design, market and distribute a number of new and innovative consumer accessories products for everyday lifestyles, whether at home or on the go
Sampling of Product Offering
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Consumer Accessories Segment
Launch of the 808 Audio brand at CES 2014 and building on the momentum
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Consumer Accessories Segment
Building upon our market leading position in Wireless & Bluetooth Speakers
Hatteras
Wireless Speaker
Glendale
Wireless Speaker
Pasadena
Wireless Speaker
Orleans
Wireless Speaker
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Consumer Accessories Segment
Schwaiger and Oehlbach Driving International Accessories Growth
Amps/Accessories Antennas Power Supply
A/V Accessories
Remote Controls
Phone/Computer Accessories
DVB Receivers Satellite Technics SAT/IP Receivers
New Home Automation Systems
The launch of the first OBLO based product onto the German retail market
beginning of 2015 from Schwaiger.
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Organizational Change to Drive Growth
• Transition beyond just automotive aftermarket products into new and exciting growth categories
• Recent partnerships with emerging technology companies in the fields of biometrics, imagery and music
• Opportunity to leverage nationwide and global distribution network
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New Growth Category
360 Degree Action Cameras
The Camera For Your Life Widest Field Of View In The World
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Action Cameras and Accessories –
A $1 Billion+ Market Opportunity
VOXX Electronics unveiled the World’s Smallest 360® Lifestyle Video Camera… Company Makes $3M Strategic Investment in EyeSee360
A uniquely designed camera that captures video in full 360 degrees and the only one of its kind
The “360fly” is a compact, lightweight, 360 degree HD lifestyle products
The 360fly is mountable on a variety of different sports equipment, from helmets to surfboards to a tiny tripod for a center of a table
Capture life in front of you and behind in a 360 degree format; stream to your phone and capture everything in one, panoramic view
WiFi and Bluetooth smart device; up to 3-hour battery life; records 2 hours of HD quality video; Android and iOS apps; rugged and water resistant
Scheduled for launch in August 2015
The Next Step in Immersive Video Capture
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New Growth Category Biometrics
A new and growing biometrics category – iris-based authentication solutions
“myris™”, the first-ever consumer-facing device featuring EyeLock’s patented iris identity authentication technology
Provides the most convenient and secure way to authenticate your digital identity
Simply plug into any USB-compatible device and receive security for up to five users in seconds; compatible with Windows 7 and 8, Mac OS and Chrome OS
Only DNA is more accurate than iris authentication; false acceptance rate is 1 in 2.25 trillion
Applications beyond just consumer and into commercial and residential security
VOXX Electronics and EyeLock Form Strategic Partnership to Deliver Game Changing Iris Identity Authentication to Consumer and Enterprise Markets
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myris Launched in November 2014
Award winning security technology Rave media reviews upon launch
“One of the technologies that will change your life forever” – Wall Street Journal
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Enterprise Market Opportunities
“There are only two types of companies left in the US: those that have been hacked and those that do not yet know they have been hacked.”
70M compromised
145M compromised
152M compromised
76M compromised
NO IRIS, NO ID myris looks at the unique characteristics of each iris and generates an encrypted
code. To authenticate your ID, myris matches the encrypted code with your eyes. This is the most secure way to protect corporate data, outside of your DNA!
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From the Creators of Guitar Hero - “Singtrix”
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“Makes Bad Singers Sound Good… …And Good Singers Sound Amazing!”
Singtrix redefines the karaoke category Over 300 preloaded “studio effect” presets Creates live backup harmonies Provides natural pitch correction Works with any music or device
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Historical Financial Review - Corporate
VOXX Revenue ($’s in millions)
VOXX Adjusted EBITDA ($’s in millions)
VOXX Gross Profit Margins
$561.7
$707.1 $835.6 $809.7 $757.5
$0.0
$200.0
$400.0
$600.0
$800.0
$1,000.0
FY11 FY12 FY13 FY14 FY15
22.1%
28.7% 28.3% 28.4% 29.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
FY11 FY12 FY13 FY14 FY15
$25.5
$60.7 $67.5
$46.5 $41.5
$0.0
$20.0
$40.0
$60.0
$80.0
FY11 FY12 FY13 FY14* FY15
* FY14 – EBITDA excludes non-cash impairment charges of $57.6 million.
(FY’s ended February 28th – FY12 year-ended February 29th)
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FY15 Year-End Results Review
Net Sales $757.5 $809.7 Gross Margin 29.6% 28.4% Operating Expenses $207.3 $267.6 Operating Income $16.6 ($37.4) Total Other Expense ($15.9) $10.7 Net (Loss) Income ($0.9) ($26.6) EBITDA $23.1 ($3.1) Adjusted EBITDA $41.5 $46.5
FY15 Ended Feb. 28, 2015 FY14 Ended Feb. 28, 2014 Sales decline related to: 1) a temporary suspension of an OEM program; 2) lower comparable OEM sales as a result of programs that launched in FY14; 3) suspended sales in Venezuela; 4) lower ASP’s for soundbars and music centers; 5) lower sales of older CG product lines; 6) lower sales in Mexico; and 7) the impact of the Euro conversion.
Gross margins up 120 bps driven by strong performance in the Automotive group (up 200 bps); positive trends in CA and PA groups in FY15 2nd half driven by new product introductions.
Operating expenses, excluding $57.6million of FY14 impairment charges improve $2.7 million.
Other expenses/income impacted by non-cash impairment charges and currency devaluation in Venezuela in FY15 and offsetting factors in FY14 (customer settlements, class action recoveries, etc.).
F’ 2015 F’ 2014 F’ 2015 vs. F’ 2014 (Euro Impact)
Total Net Sales $757.5 $809.7 ($12.0)
Automotive $396.4 $412.5 ($8.0)
Premium Audio $165.8 $189.2 ($2.4)
Consumer Accessories $194.1 $206.3 ($1.6)
Corporate $1.2 $1.7 - - -
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FY15 Balance Sheet Updates
Significant improvement in balance sheet as Company continues to pay down debt
Domestic bank obligations $67.7 $88.0 ($20.3) Euro asset-based lending obligation $4.1 $3.8 $0.3 Schwaiger Mortgage $1.2 $1.7 ($0.5) Klipsch notes $6.9 $7.9 ($1.0) VOXX Germany mortgage $5.6 $7.9 ($2.3) Total debt $85.5 $109.2 ($23.7) Less: current portion of long-term debt $6.0 $6.0 - - - Total long-term debt $79.5 $103.2 ($23.7)
FY15 FY14 $ Chg.
Total debt, inclusive of all mortgages and capital leases as of 2/28/15 of $86.3 million vs. $115.3 million as of 2/28/14, an improvement of $29.0 million.
This includes $6 million in investments in Eyelock and EyeSee360 during FY15, $2.6 million in stock repurchases, and $2.9 million spent in the FY15 fourth quarter to purchase land in Florida.
Total cash position of $8.4 million as of 2/8/15 vs. $10.6 million as of 2/28/14.
Accounts receivable, net of $102.8 million as of 2/28/15 vs. $147.1 million as of 2/28/14.
Inventory of $156.6 million as of 2/28/15 vs. $144.3 million as of 2/28/14; increase related to West Coast port issues and planned production at VOXXHirschmann.
Capital expenditures of $17.1 million, in line with budget and prior guidance.
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FY15 Summary and Outlook
FY15 impacted by several short-term factors and product launch delays.
Retail placement and OEM contracts and production remain strong.
Gross margin improvement and lower operating expenses result in operating income improvements.
New OEM programs to start in FY16 and awarded for future years.
Launch of 360fly action cameras scheduled for August 2016; beginning to receive positive reception for biometrics offering, myris, with enterprise customers.
New Premium Audio products under Reference having positive impact on margins and profitability.
Continued focus on execution, while identifying new products and product categories for growth.
Ongoing balance sheet improvements and consistent cash flow generation.
Positioning VOXX for the future
Focused on delivering improved top- and bottom-line performance in FY16, while building a pipeline of future business in the years ahead.
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Except for historical information contained herein, statements made in this release that would constitute forward-looking statements may involve certain risks and uncertainties. All forward-looking statements made in this release are based on currently available information and the Company assumes no responsibility to update any such forward-looking statement. The following factors, among others, may cause actual results to differ materially from the results suggested in the forward-looking statements. The factors include, but are not limited to risks that may result from changes in the Company's business operations; our ability to keep pace with technological advances; significant competition in the automotive, premium audio and consumer accessories businesses; our relationships with key suppliers and customers; quality and consumer acceptance of newly introduced products; market volatility; non-availability of product; excess inventory; price and product competition; new product introductions; foreign currency fluctuations and concerns regarding the European debt crisis; restrictive debt covenants; the possibility that the review of our prior filings by the SEC may result in changes to our financial statements; and the possibility that stockholders or regulatory authorities may initiate proceedings against VOXX International Corporation and/or our officers and directors as a result of any restatements. Risk factors associated with our business, including some of the facts set forth herein, are detailed in the Company's Form 10-K for the fiscal year ended February 28, 2015.
Safe Harbor Statement
