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VOXX International (NASDAQ:VOXX)

Q1 2013 Earnings Call

July 11, 2012 10:00 am ET

Executives

Glenn Wiener

Patrick M. Lavelle - Chief Executive Officer, President and Director

Charles Michael Stoehr - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Director

Analysts

Michael Fawzy Malouf - Craig-Hallum Capital Group LLC, Research Division

Matthew Spratford - Sidoti & Company, LLC

R. Scott Tilghman - Caris & Company, Inc., Research Division

Thomas Graham Kahn - Kahn Brothers Advisors LLC

Jeffrey Osher - Harvest Capital Strategies LLC

Glenn Wiener

Good morning, everyone, and welcome to the VOXX Internation Fiscal 2013 First Quarter Results Conference Call. Today's call is being webcast on our website, www.voxintl.com and can be accessed in the Investor Relations section. With me this morning are Pat Lavelle, President, Chief Executive Officer; Michael Stoehr, Senior Vice President and Chief Financial Officer; and John Shalam, our Chairman of the Board.

Before we begin, I'd quickly like to remind everyone that except for historical information contained herein, statements made on today's call and webcast that would constitute forward-looking statements are based on currently available information, and the company assumes no responsibility to update any such forward-looking statements. Risk factors associated with our business are detailed in the Form 10-K for the fiscal year ended February 29, 2012.

We'll begin today with opening remarks from Pat and Mike, and we'll then open up the call for your questions. And if anyone has any follow-ups thereafter, please feel free to contact me directly at the office. And at this time, I'm going to turn the call over to you, Pat.

Patrick M. Lavelle

Thank you, Glenn. Good morning, everyone, and thank you for joining us. Yesterday, we released our first quarter results, and as you can see from our announcement and intention filing, we have lots to discuss this morning.

On the sale side, our domestic operations performed mostly to plan, and there are several new programs within each group: mobile, OEM, accessories and high-end audio, which should have a positive impact in the coming quarters.

Internationally, we did experience some weakness, driven primarily by the lower Euro translation. We also had a number of anticipated onetime acquisition expenses, which we outlined on our last conference call. And finally, last week, we filed a Form 8-K announcing a settlement on a long-standing patent litigation.

Before going into all the details, let me start off by saying we have maintained our guidance, only adjusting for the settlement charge and its impact to EBITDA.

In the first quarter, we reported net sales of $194 million, an increase of 17.4%, compared to $165.3 million. Hirschmann, our most recent acquisition, accounted for $36.6 million, while the other areas of our business were down approximately $8 million. However, the Euro was down a little over 9% for us over the same quarter last year and has -- had a negative impact of $2.5 million to top line revenue.

Additionally, approximately $5.4 million of the decline was related to our strategy to deemphasize lower margin commoditized products. We also have approximately $3.6 million in lower sales related to timing sequences within our OEM group, which I will touch on in a moment.

A big part of our fiscal 2012 success story was international sales. In fiscal '13, the international markets are quite different than at this time last year. For example, Germany, where we do significant business, was generally immune to the pressures felt in Greece, Spain and other parts of the world last year. That changed in this first quarter, and we experienced some weakness for the first time in years.

In addition to the Eurozone countries, China, which has been the world's strongest market as of late, also slowed a bit in the first quarter. However, even with this softness and the lower Euro translation, our international sales, less Hirschmann, were up 3.5%, primarily driven by an increase in Accessories business.

We accounted for the Euro challenges in our budget planning; and overall, our net revenue was in line with our projections. Our domestic accessory product lines grew nicely this quarter, up 28.7%, building upon the momentum we had in the second half of last year.

I am pleased with the reception our wireless speakers have received by the market, and I expect this to continue to grow. I also expect our domestic accessory group to gain market share this year.

Klipsch sales domestically are continuing to gain traction in the headphone space, and we have new sales from our G17 AirPlay-enabled music system, recently introduced sound bars and other high-end speaker systems.

Our domestic OEM group declined by approximately $3.6 million. However, this was mostly due to timing of OEM programs. An OEM program with Ford ended in the first quarter and will be replaced by 2 new Ford programs in 2Q.

In addition, the Nissan program that I announced last year was initially slated to begin in the third quarter. This has been pushed up to Q2. These programs will more than offset the shortfall in the first quarter. Additionally, we will begin the rollout of our new LBS program with Sprint this quarter. And with everything going on, we fully expect to meet mobile projections.

Domestically, our business is mostly tracking to plan, and we see potential for upside based on new products coming to the market within all groups. This had and should help offset the lower Euro translation and is a primary reason we are reiterating top line guidance.

Our gross margins for the quarter came in at 26%, which is slightly lower than the 26.4% we reported in last year's first quarter. If not for the lower Euro translation and the impact of Hirschmann's inventory valuation adjustment and the onetime move of our Hong Kong facility, our margins would have been up slightly. We expect increases to our gross profit margin in the second quarter and in each quarter beyond and remain comfortable with our prior guidance of 28% for the year.

Mike will walk you through our income and EBITDA on a detailed basis in just a few moments, as there's lot of information to dissect. I'd like to cover a few points first.

We reported operating income of $3.1 million versus $4 million last year and a net loss of $4.7 million versus a net profit of $2.5 million in last year's comparable quarter. However, within the net losses are several onetime expenses related to the Hirschmann acquisition and the charge associated with the recently reported settlement. Our EBITDA came in at a loss of $2.5 million, but on an adjusted basis, was approximately $10 million in fiscal '13's first quarter versus $9.7 million in the first quarter last year.

On our year-end call in May, I provided guidance of $900 million in sales, 28% gross profit margins and EBITDA of $62 million to $65 million. Today, despite the lower Euro and problems in Europe, we have reiterated top line and margin guidance. EBITDA will be lower than expected due to the most recent settlement and the charge we took in the first quarter for $8.4 million.

We now expect EBITDA for fiscal '13 to be approximately $54 million to $57 million. The Euro is 14% below last year's level and over 6% off our plan of $1.30. Domestic growth should offset this, though on our next conference call, we may adjust our models accordingly based on where the Euro is and expectations for the second half.

In summary, we alluded to retail softness and expected onetime charges in our year-end call. And we knew coming into the first quarter, we would face some challenges. While the markets remain tough, we are executing on our plan; and I am pleased with the progress we are making.

Our domestic business in accessories, mobile and high-end audio are all expected to grow this year. Again, new LBS programs with QUALCOMM and Sprint, new OEM programs with Ford, Nissan and Bentley. We have new wireless speakers, new power products under RCA and Acoustic Research, new products from Klipsch in headphones, AirPlay and sound bars. Internationally, we are feeling the effects of the Eurozone. However, we are well positioned in our target markets and with any recovery, comes a positive impact to our financial performance.

Over the next few years, I am confident that we will see organic growth and drive incremental profits for the bottom line. With our last 3 acquisitions, we have substantially improved our engineering and manufacturing capabilities. Today, we have over 270 engineers on staff developing products for the next wave of technological advancements. We have transformed from an import distribution model to one where we create much of our new products internally, which will position us to grow margins and capitalize on future trends. This is a big part of the VOXX International story.

We continue to deemphasize lower margin, commoditized product lines and focus on value-added, higher-margin growth categories. We're focused on paying down our debt and will be active in the M&A markets as good opportunities present themselves. Near term, however, our focus is on efficiency, lowering fixed costs, transitioning Hirschmann and overall profitability.

I'll now turn the call over to Michael for our financial review, and then we will open it up for questions. Mike?

Charles Michael Stoehr

Thanks, Pat. Good morning, everyone, and thanks for joining us today. I'd like now to walk you through our first quarter results; and as I do so, I'm going to provide more color around what impacted our performance, specifically all of the charges and expenses we incurred as we indicated on our last call. So you'll have a clear sense of our operational performance and adjusted numbers.

For the comparable quarters, our sales were up $28.7 million or 17.4%, with Hirschmann accounting for $36.6 million of the increase. As we reported in our Form 10-Q, Electronics sales were up $20.5 million or 15.5%, driven by Hirschmann. Accessory sales were up $8.2 million or 24.8%.

Domestically, we fared quite well. Our challenge has been in some of the international markets given what's going on not just with the Euro but with the Eurozone and China. Despite this, our international business was up $600,000 or 2.2%.

As a percentage of net sales, Electronics represented 78.8% versus 80% of sales for 3 months ended May 31, 2012 -- in May 31, 2011, and Accessories accounted for the difference. Our gross margins were down 40 basis points, 26.4% in last year's quarter this -- in last year's first quarter versus 26% this year, and we did expect this to a degree.

As you saw last year, our gross profit margins increased in each sequential quarter, and we finished this year at 28.7%. As Pat outlined, we expect similar increases this year based on our product and program mix. Margins domestically are holding steady with some of the lower margin product lines we've deemphasized. It's really the international markets where we are seeing the effects, as well as some of the onetime variables, which impacted margins this quarter.

We relocated our Klipsch warehouse in Hong Kong, which impacted gross profits by approximately $500,000. This will help drive operational efficiencies effective immediately and positively impact future quarters. As we referenced last quarter, as a result of the Hirschmann transaction, the accounting impact on the fair value of the inventory purchased resulted in a charge of approximately $350,000.

As we sell through this inventory, we expect a similar charge in the second quarter. Let me add that on our year-end call, we expected the total charge to be approximately $1 million, and we should come in under that number. We also had a duty refund pickup of approximately $280,000, which went into the cost of goods sold last year.

So as you can see, while gross margins were lower than at this time last year, operationally, we are tracking slightly ahead. I will add that while we do expect higher fulfillment sales this year versus last, which as you know, are lower margin products, we are comfortable with our 28% margin guidance.

Operating expenses for the quarter were $47.4 million, up $7.7 million or 19.5%. Within this, Hirschmann expenses accounted for $8.4 million, so our core overhead was down $700,000 or 1.7%.

Now the first quarter this year included professional service fees related to our patent litigation settlement. On comparable basis for the first quarter of fiscal '13 versus fiscal '12, acquisition costs -- related costs were $1.6 million versus $1.3 million.

On our year-end call, we discussed that the company would be reinstating some salary increases and adding back benefits, which will cut over a 3-year period during the economic downturn. We had some of these costs added back. And despite this and the higher professional service fees, our operating expenses were still down, less Hirschmann.

We experienced lower depreciation, had lower commissions, lower occupancy costs in Indy as a result of our purchase of the Klipsch headquarter building. Whereas in prior periods, this was under lease.

While some costs will be added back this year to remain competitive in the marketplace and we have plans to increase our advertising and marketing spend for the year, there are programs underway to leverage some of our fixed overhead, and we have identified further synergies through office warehouse and company-wide systems consolidation, which will result in cost savings next year and beyond.

Now for operating and net income, EBITDA and our adjusted numbers. We reported operating income of $3.1 million versus $4 million last year's fiscal first quarter. We had an increase in interest and bank charges of $761,000, which is primarily due to the interest expense and fees and amortization of deferred financing costs related to the amended credit facility we entered into on March 14 to fund the Hirschmann acquisition.

Equity income and equity investees was up approximately $228,000. This is principally the income from our JV, ASA. The big impact was in other net expenses and income, which decreased approximately $10.1 million, a $9.7 million expense versus a $481,000 benefit last year. Other net decreased due to, one, net charges recorded for the 3 months ended May 31, 2012, in connection with the patent suit of approximately $8.4 million; and two, losses on foreign exchange contracts of approximately $2.7 million associated with the Hirschmann deal. These charges were partially offset by a favorable settlement received by Klipsch of approximately $800,000.

With all of these charges and onetime expenses, we reported a net loss of $4.7 million or a loss of $0.20 per diluted share versus net income of $2.5 million or diluted EPS of $0.11 a share. And we reported an EBITDA loss of $2.5 million for the quarter versus $8.1 million last year.

Let me provide the numbers on an adjusted basis, which is the most -- which is what most of you will be focused on due to all the moving pieces that we had in this first quarter. One, stock-based compensation was $63,000 in the first quarter of fiscal '13 versus $250,000 in last year's first quarter. Two, acquisition costs -- acquisition-related costs were $1.6 million -- this is related to the Hirschmann acquisition -- versus $1.3 million, which was related to the Klipsch acquisition last year.

The following charges were solely for fiscal '13 period: One, the net settlement charge related to the patent litigation was approximately $8.4 million. We took, as I mentioned, the $521,000 charge related to an Asian restructuring of our warehouses. We had a $2.7 million loss on foreign exchange contracts related to Hirschmann. Note, this is related to timing issues. As I explained in the last quarter's call, we had a pickup in the fourth quarter and across the quarters for our losses [ph] and the first quarter this year. And number 4, and these charges were offset, as I mentioned, by $800,000 gain I discussed earlier related to Klipsch. Taking to account these 6 variables, we reported adjusted EBIT of $10 million versus $9 million for the comparable first quarter and a diluted adjusted EBITDA for common share of $0.43 versus $0.42.

Moving on to our balance sheet. Operating activities provided net cash of $20.2 million for the 3 months ended May 31, 2012, principally due to an increase in accounts payable and accrued expenses and a decrease in accounts receivable, partially offset by increased inventories. Our AR turns were 5.6x for both fiscal '13 and fiscal '12 first quarters, and our inventory turns improved 3.4 versus 3.1 for the same periods.

Investing activities used cash of $116.3 million, principally due to the Hirschmann acquisition and the purchase of the Klipsch building.

Financing activities provided cash of $104.5 million, principally from borrowings on bank obligations used to finance the Hirschmann transaction, offset by repayments of these obligations.

Last quarter, we provided all of the details regarding our amended facility with Wells Fargo. You can also review our Form 10-Q filing, which has the updated information.

At the time of purchase on March 14, 2012, we borrowed approximately $144 million to fund the purchase agreement. As of today, our outstanding borrowings are $158 million, which accounts for the settlement payment. While borrowings are up, our cash position is up as well, $21 million versus $14 million.

We remain on track to repay the debt in full within 5 years and most likely sooner based on our working capital needs and forecast.

A few final comments before we open up the call for question. Our revised EBITDA guidance takes into account the settlement charge of $8.4 million, and we are projecting EBITDA of $54 million to $57 million. There is an upside to this number based on any money we may recover from our vendors as we are actively pursuing them, as well as for any positive increases in our operation.

However, the Euro was currently at 122.5 and is on a downward bias. This is why, as Pat mentioned, we will revisit guidance on our second quarter call.

We have sufficient working capital to execute the strategy we've laid out and feel good about the long-term prospects of our company. We've identified some synergies. We're looking at others and believe there is room for further cuts to our expense structure, even while adding to the top line. That's when we'll be in a strong position to generate incremental profits to the bottom line.

Thank you. And at this time, I'll turn the call back to Pat.

Patrick M. Lavelle

Thank you, Mike. And we'll now open the call up to questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Mike Malouf with Craig-Hallum.

Michael Fawzy Malouf - Craig-Hallum Capital Group LLC, Research Division

A couple of questions. Can we start off with the Euro impact. We are facing guidance at 130, and as you pointed out, we're at 122.5 right now. Can you give us a sense of what the impact is, like for example, every $0.05 impact affects sales and EBITDA [indiscernible] color on how we can judge the impact on your guidance that would be helpful?

Patrick M. Lavelle

Yes. Well, basically, I made the comment that the Euro for us, even though it was down in the first quarter 13% year-over-year, it was only down for us 9% because we had some hedge positions. Those hedge positions are winding down. We do have a few left. But our calculation is basically for every $0.05, we see in the drop in the Euro, we're looking about -- for the balance of the year now -- we're looking about $12 million hit to the top line revenue and about $1 million hit to EBITDA.

Michael Fawzy Malouf - Craig-Hallum Capital Group LLC, Research Division

Okay, great. That's helpful. And then maybe just a little bit of comment on Mobile TV in the U.S. Has there been any update there? We -- as we look out into 2013 and obviously, it could be a nice additive to your business, and I'm just wondering if you can give us an update.

Patrick M. Lavelle

Yes, the -- everybody involved is still in the process of getting ready for some time next year. MCV, who we are working with, is meeting with us on a regular basis. We are in the process of developing products. So we're in that prelaunch stage. I can't give you an exact date, but we expect to see sales of mobile DTV in the United States sometime next year.

Operator

Your next question comes from the line of Matt Spratford with Sidoti & Company.

Matthew Spratford - Sidoti & Company, LLC

I just had a quick question on Klipsch. I was just wondering if you could give us what they did for the quarter in revenue?

Patrick M. Lavelle

Klipsch was -- we don't break down the individuals, but Klipsch was almost flat with last year's sales, with any weakness really just being the Euro translation in their sales. What we are expecting as we look down the road and into the second and third quarter with Klipsch, we are introducing a number of new headphones and a number of new sound bars that we are getting good placement with. And domestically, we think these new products, the strength of the product line that is already out there, the market share that they have will give us growth in subsequent quarters that will offset any weakness that was generated in the first quarter.

Matthew Spratford - Sidoti & Company, LLC

All right. Any new doors or any expanded distribution we can look forward to?

Patrick M. Lavelle

We are in the process of talking to some other majors, but it's early stage.

Matthew Spratford - Sidoti & Company, LLC

Got you. And then just one more quick one for you on the wireless speaker strength. Accessories are up pretty strongly. Is that due to the inclusion in some of those -- the home improvement channels you mentioned towards the end of last year?

Patrick M. Lavelle

Yes, we shipped Home Depot this year, which we hadn't in previous years. So that impacted sales. But our wireless speaker programs, we have 2 programs, one is a -- the core package for use on your patio, by the pool and everything, and we've had some very, very active sales in the first quarter on those speakers. We are introducing, as we speak, a new sport version wireless speaker, and this allows you to stream right from your iPhone or smartphone right to the speaker. And the response that we're getting from retail is very strong. So we're quite bullish about our Accessories sales as we look into the third quarter, when we start to deliver the new sports speakers as well. We also received very good placement of our power products within most of the major retailers. And these are products that will help charge the smartphones, iPads, iPods. We're very power hungry, so we had some very, very good placement of our power program in the first quarter, and I expect that we would see some good sales in back to school and as we get into the third quarter. One other thing that impacted our first quarter sales was the set-top box, analog to digital conversion that went on in Europe. That's pretty much over at this point, but it did give us a nice lift in our accessory business in Europe.

Matthew Spratford - Sidoti & Company, LLC

That makes sense. And then just one more quick one for you. Just actually those sort of alluding to my next question. Just in terms of the international sort of landscape that you're seeing right now, is -- do you think Q1's international strength is sort of atypical? Or was it especially driven by the digital conversion?

Patrick M. Lavelle

Well, I think that we -- like I said, the accessory business was helped pretty much by that. We expect some new programs to start with some of the retailers, but I would -- my -- our concern obviously is what's happening in the Eurozone, and for our Hirschmann operation, a slowdown in China affects them because they do supply equipment that goes on the 4 German car manufacturers vehicles, and any drop in sales of those vehicles in China would be felt by Hirschmann as well. So China for the first time really does play into our overall top line revenue.

Operator

Your next question comes from the line of Scott Tilghman with Caris & Company.

R. Scott Tilghman - Caris & Company, Inc., Research Division

Wanted to start with a couple of housekeeping items. First off, CapEx, was wondering if you could update us as to what you expect for the full year and also, what maintenance levels look like going forward now that Hirschmann is fully rolled in.

Charles Michael Stoehr

Scott, it's Mike. Probably, on the CapEx, we're right now, not counting me, we put $10 million into the Klipsch building, so we're -- probably all in for the year, it'll be 23.

R. Scott Tilghman - Caris & Company, Inc., Research Division

Okay. And then from a maintenance level...

Charles Michael Stoehr

And after that, it'll -- and each year, you can look at for your models between $10 million and $12 million.

R. Scott Tilghman - Caris & Company, Inc., Research Division

$10 million and $12 million. Second, just from an accounting standpoint, any funds you get back from the suppliers on the patent litigation, will that just fit the other line as well?

Charles Michael Stoehr

Yes, it will, go through earned income expense [ph] .

R. Scott Tilghman - Caris & Company, Inc., Research Division

Okay. Third thing I had -- sorry, I have a laundry list here. But on the hedging front, Pat, you alluded to some of the hedges sort of unwinding here. Given the volatility in the Euro in particular, have you given any thought to perhaps being more active on the hedging front? Or do you feel that you have enough natural hedges in place with the costs being in Europe?

Patrick M. Lavelle

Well, we do have some natural hedges in place, but we are watching it very closely. Yes, we would consider to hedge if we think the position was right. From our banking groups, we're seeing the Euro bouncing around anywhere from 122 to 127. So we're watching it very, very closely. Any uptick, we may make a move.

Charles Michael Stoehr

And we're -- I'm also looking at the hedge cash flow into the parent here. We are taking some funds up out of the acquisition. So we're looking to hedge that cash during this year.

R. Scott Tilghman - Caris & Company, Inc., Research Division

When the Nissan relationship, it's great that it's going to be starting a little bit earlier. Can you remind us how many models you'll be in?

Patrick M. Lavelle

We're in all of their SUVs. And it's a program that would be quite impactful to our Invision group, probably starting -- in the third quarter, you'll see it ramp up. So again, what we're looking at is anything that we do in the second and third quarters, we're expecting to see some strong sales that we feel would offset weaknesses in any other areas where we have them.

R. Scott Tilghman - Caris & Company, Inc., Research Division

And last thing, I'll turn it over to someone else. But your focus historically has really been on the rear of the vehicle. And now with the Hirschmann acquisition and the various antennas that tie into the dash, wondering if you're giving any thought to perhaps being more front of the vehicle focused, especially since you already have some aftermarket products, like the backup cameras that tie into that space.

Patrick M. Lavelle

Anything that we would do would be front of the vehicle would be more in line with a receiver and antenna combination, which would not really be what you see in the front seat. But it would work with what's in the front seat. So any move you see towards the front of the vehicle, that would be the tack that we would take. Our capability in antenna and reception and receivers is unique, and we plan to exploit that.

Operator

Your next question comes from line of Thomas Kahn with Kahn Brothers.

Thomas Graham Kahn - Kahn Brothers Advisors LLC

A question on this MPEG LA. Who were the suppliers and what stage is this pursuing them? And should we hope for anything? Or how hard should we pray?

Patrick M. Lavelle

We have active litigation with one of the major suppliers. This MPEG LA product had to do with the DVD products. And we do expect that we would recover some. I don't -- I'm not so sure we're going to recover all, but we feel our prospects to recover a good portion of that payment is real.

Operator

Your next question comes from the line of Jeff Osher with Harvest Capital.

Jeffrey Osher - Harvest Capital Strategies LLC

Two, I just want to clarify. On the gross margins, so being with rent [ph] flat, x the $350,000 of inventory write-downs from Hirsch. And what was the other? We need to pick up about the $700,000 to get them flat year-over-year or $600,000?

Patrick M. Lavelle

We had that would -- we had about $500,000 in expenses that would hit our gross profit based on the move of our facility in Hong Kong.

Jeffrey Osher - Harvest Capital Strategies LLC

Great. So the relocation charge, that Asian restructuring charge you took, $500,000 flow through COGS?

Patrick M. Lavelle

Yes.

Charles Michael Stoehr

That's correct.

Jeffrey Osher - Harvest Capital Strategies LLC

Perfect. And then let's go ahead -- there's these accounting irregularity rumors floating around this morning so let's just dismiss them so we can move on. On the EBITDA walk [ph] , are you guys including interest income in rent income in your EBITDA?

Charles Michael Stoehr

No. No.

Jeffrey Osher - Harvest Capital Strategies LLC

Okay. Can you guys help us with the walk then in your $9.959 million, you're excluding interest and bank charges of $2.244 million?

Charles Michael Stoehr

That's correct.

Jeffrey Osher - Harvest Capital Strategies LLC

Where is the exclusion for the $193,000 of rental income and the $177,000 of interest income?

Charles Michael Stoehr

When you look at the adjustments that we made, I sort of -- we sort of adjusted it out on an average basis. We don't get a lot. It's a couple - it's about 100 plus?

Jeffrey Osher - Harvest Capital Strategies LLC

Where is that? where -- can you just [indiscernible] ...

Charles Michael Stoehr

That would be in other income expenses. It's about 100-some-odd-thousand dollars for the quarter.

Jeffrey Osher - Harvest Capital Strategies LLC

No, based on your Q, it's $177,000 of interest income, $193,000 of rental income. Can you point me in your table to where you excluded that?

Charles Michael Stoehr

It would be in the other income. On the table, I don't -- it's not in the table.

Jeffrey Osher - Harvest Capital Strategies LLC

So you included it.

Charles Michael Stoehr

No, we did not.

Jeffrey Osher - Harvest Capital Strategies LLC

Can you point me to where it is excluded?

Charles Michael Stoehr

No, I can't at this point, but I can get back to you with that.

Jeffrey Osher - Harvest Capital Strategies LLC

Okay. Did you include your equity affiliates, the noncash income from equity affiliates and the $9.959 million of adjusted EBITDA?

Charles Michael Stoehr

Yes, we did.

Operator

At this time, there are no additional questions on the line.

Patrick M. Lavelle

Okay. If there are no additional questions, once again, thank you for your time this morning and your interest in VOXX. And I wish you a good day. Thank you.

Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.

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