VOXX paid down $ 35 MM of debt in Q1, almost all using cash flow from operations. It has now paid off the debt incurred to buy Klipsch, and anticipates paying down more debt this year.
I have only listened to a few VOXX earnings calls, so my next comment could be wrong. I didn't think many analysts covered VOXX, but I was impressed by the number of analysts on the call asking questions. This includes the B Riley and Imperial Capital guys who raised their target prices recently, but also there were about a half dozed others. BTW, VOXX attended a recent conference put on by B Riley and will attend another conference to be put on by Imperial Capital in Sept. So it looks like coverage is increasing.
Mgt said there was nothing unusual in Q1. But later they mentioned that the company was still going thru layoffs, and expected to continue incurring severance and stay-bonus costs in Q2 and Q3, similar to Q1. So Q1 must have included these costs, but I didn't hear or see the amounts. Also, they plan to consolidate a Klipsch warehouse with a VOXX warehouse in California, which will result in some 1-off costs in the next 2 Qs or so. They expect the annual savings from all of these costs to amount to maybe $ 3 MM in fiscal 2015.
They don't expect business to improve a whole lot, especially on the consumer side, for a while. So maybe a quiet year. This year's numbers still won't be entirely clean, with the severance and warehouse consolidation, but it should be pretty straight-forward. So maybe we can see the company's earnings power, even if the business environment isn't too good.
Your comments on the debt and cost savings caught my attention on the call. However, in addition, there is also the dynamic of the gross margin expansion, which management had attributed to better facility cost absorption as they ramp up the OEM programs. If you run some numbers with a moderate sales increase (from growth in OEM vehicle product sales), more margin expansion and the savings you note, that represents nice profit expansion and a good value proposition in terms of the shares. Also, assurances by management of no more hiccups on the auto OEM programs was assuring, to me anyway. Would also draw your attention to 'major holders' tab on Yahoo Finance, where you will find Royce & Associates being a 5% holder of VOXX. Although I don't sense these guys are hard core 'activist' shareholders, they tend to wind up in the same stocks as the true activists do......in other words, they seek hidden value and they must believe that they have found it here with VOXX. My cost basis is $7 and I'm not going anywhere anytime soon. Good summary by you for those who did not get the opportunity to listen to the conference call, good homework!!