VOXX reported lower sales of remote start in its recent quarter ended May 31 compared to the year earlier. It also provided some insight into the current state of the supply chain, in a recent conference call with analysts.
VOXX reported aftermarket product sales, which include VOXX and Directed remote start, fell to just under $23 million, versus $27.7 million a year ago. The decline was due to retailers loading up on product the year before for fear of shortages. The company also said it was impacted by the general low supply of parts and components. These factors were partially offset by higher sales of aftermarket accessories.
VOXX President and CEO Pat Lavelle explained that lower car sales due to fewer chips hurt both aftermarket and OEM sales at VOXX.
He estimates car production is down about 20 percent year over year, or an annualized rate of 13-14 million vehicles. The last time the rate dropped that low was in 2011.
“…since a significant percentage of our aftermarket business is done with new car dealers, the shortage of inventory on their lots is also impacting our automotive aftermarket sales,” Lavelle said.
VOXX expects chip shortages to run well into next year.
Lavelle continued, “Another area that has been a concern is the run-up in labor costs in the United States, which has negatively impacted OEM gross margins.” As a result, the company will move some of its production from the US to Mexico, “where labor is roughly half the cost. We expect our facility to be ready in August and to be in a position to start shipping products in the start of our fiscal third quarter.”
OEM sales remain a bright spot for the company. Lavelle, noted VOXX has received over $750 million in new OEM contracts over the past three years and most of those are in those are in the future rather than the past. Another $300 million in OEM business is pending.
VOXX OEM sales rose for the quarter to $16.7 million, up from $14.9 million a year ago, driven by higher VOXX sales of OEM rear-seat entertainment systems. Again, sales would have been higher but for “ongoing supply chain constraints and component, part and chip shortages,” it said.
All in all, total VOXX Automotive Electronics net sales fell 7.2 percent to $39.6 million compared to $42.7 million a year ago.
Total net sales, including Premium Audio (Klipsch, Onkyo and Pioneer) and Biometrics fell 6 percent to $128.7 million for the quarter versus $137.1 million a year ago.
Profits swung to a loss of $6.5 million, compared to positive profits of $2.7 million a year ago.
