VOXX International Reports 22.2% Revenue Decline Amid Financial Challenges

VOXX International Corporation reported significant financial challenges in its latest 10-Q filing for the three and nine months ended November 30, 2024. The company recorded net sales of $105.2 million for the third quarter, a decrease of 22.2% from $135.3 million in the same period last year. For the nine months, sales fell to $289.3 million, down 19.8% from $360.8 million. The decline in revenue was attributed to reduced demand across its Automotive and Consumer Electronics segments, exacerbated by macroeconomic factors such as inflation and changing consumer spending habits.

The company's gross profit for the third quarter was $22.3 million, down from $36.3 million a year earlier, reflecting a gross margin of 21.2%, a decrease from 26.9%. The nine-month gross profit also fell to $70.4 million from $92.5 million, with a gross margin of 24.3%, down from 25.6%. The decline in profitability was influenced by inventory writedowns and lower sales of high-margin products, particularly in the Automotive Electronics segment, which saw a significant drop in aftermarket security and remote start products.

In terms of operational changes, VOXX completed the sale of its domestic accessories business on August 30, 2024, which contributed to a $10.8 million decline in sales for the third quarter. The company also recognized impairment charges totaling $44.3 million, including $28.2 million for goodwill and $16.1 million for intangible assets, reflecting a reassessment of its business outlook. Additionally, VOXX has been restructuring its operations, including relocating manufacturing from Florida to Mexico, which is expected to yield cost savings and improved margins in the long term.

Looking ahead, VOXX has entered into a merger agreement with Gentex Corporation, which is expected to close in the first half of 2025. Under the terms of the agreement, Gentex will acquire all outstanding shares of VOXX for $7.50 per share. This strategic move is part of VOXX's efforts to maximize shareholder value amid ongoing operational challenges. The company is also focused on improving cash flow and managing its working capital, with cash and cash equivalents reported at $6.3 million as of November 30, 2024, down from $11 million at the end of the previous fiscal year.