Klipsch Generated $169 Million in First Year as Voxx Audio Brand
Recent elections in France and Greece and further uncertainty about the euro is leading Voxx to temper sales projections for fiscal 2013, the company said on an earnings call Tuesday. Based on sales and expense projections, CEO Pat Lavelle projected $900 million in sales for fiscal 2013, basically little changed year over year. “The euro conversion will reduce sales by approximately $26 million alone,” and another $10-$20 million of low-margin commodity business “may be eliminated,” Lavelle said.
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The Klipsch brand, which Voxx acquired on March 1, 2011, generated sales of $169.5 million for fiscal 2012 ended Feb. 29, Voxx said. Klipsch also consumed $39.2 million of company operating expenses for the year, it said. Net sales for the year were $707.1 million, up 25.9 percent, with electronics sales totaling $561 million, up from $415.2 million in fiscal 2011, the company said. Voxx expects new Klipsch designs such as dual-mode noise-canceling headphones, AirPlay products and soundbars to provide “strong new sales,” enabling the company “to get a strong foothold at retail” and lead growth for fiscal 2013, Lavelle said.
Accessories sales slipped 0.3 percent to $146.1 million from $146.5 million, Voxx said. Voxx, which bought German OEM antenna and in-vehicle TV tuner company Hirschmann in March, saw increases in its OEM mobile electronics segment, domestically and abroad, and higher sales across most of its international segments, it said.
Gains were offset by sales declines in Voxx’ commoditized consumer AV business, falling about $26.8 million, and in mobile audio, primarily satellite radio fulfillment sales, down about $20.8 million, said Chief Financial Officer Michael Stoehr. As a percentage of net sales, electronics and accessories represented 79.3 percent and 20.7 percent of sales for the fiscal year compared with 73.9 percent and 26.1 percent in fiscal 2011, Stoehr said.
On plans for the mobile TV rollout in the U.S., Lavelle said the company is “waiting for the broadcasters.” The Mobile Content Venture, which includes NBC and Fox, are “starting to bring products to market” with an eye on 50 markets, Lavelle said. Voxx is looking at a 12-18-month roadmap that will play out in fiscal 2014, he said. Regarding antennas, once the mobile TV market gets rolling in the U.S., it will be bigger than Europe, he said. “We don’t have every antenna that’s in a Mercedes,” he said, “but we have a number of different ones in there.” The company has an alternative antenna business in the U.S., where it is the supplier for AT&T’s Smart Antenna, among others. Resulting sales from that business “could be substantial,” he said
Hirschmann provides TV tuners for Audi, Mercedes-Benz and Volkswagen in China, where premium car makers are enjoying “very, very good business” that’s expected to grow, despite a dropoff in car sales in calendar Q1 this year, Lavelle said. The penetration rate of mobile digital TV tuners is much higher in China versus Europe and the U.S., because of the high rate of chauffeured vehicles where car owners sit in the back seat and can view TV, he said.
In the Europe market, conversion rates “are going to bounce around,” but of more concern, Lavelle said, is a slowdown in Europe that’s “a little bit deeper than many economists had expected.” Voxx is “starting to see that softness at retail,” he said. Hirschmann sales are strongest in the U.S., where 14.4 million cars will be sold next year, but the greatest opportunity for future growth is in China, he said. Despite the sales dip in Q1, “I don’t think there’s a car executive that does not look at China as being the growth story for them over the next decade,” he said.
Hirschmann has a low-cost antenna manufacturing facility in Hungary, and Voxx has No. 1 market share for TV antennas in the U.S., Lavelle noted. Voxx is looking at “all opportunities” for synergies, including having the Hungary plant manufacture home antennas “for us,” he said.