Q4 2020 VOXX International Corp Earnings Call

I covered some of our new products in.

On our third quarter call but to quickly summarize we're expecting strong contributions from the personal Audio and Sound Bar categories with the launch of the fives with power which are powered monitors, which are happening now are market-leading promedia speakers are true wireless headphones new Soundbars with Dolby Atmos Wi-Fi name Google Assistant.

An Amazon Alexa all launching the summer and fall and finally with Clips as the official headphone and portable audio partner of the McLaren Formula One team. We have new headphones coming this summer and in the fall.

The clips lineup has never been stronger.

Staying with the Consumer Electronics segment sales of accessory products again as expected due to the restructuring but we saw a higher gross margins and significant overhead reduction. We expanded our market share in the antenna category added new SK use at Walmart and was chosen as the exclusive antenna supplier at Home Depot. We began. Tick in the antenna category as consumers again are cutting the cord a positive for Vox given our antenna portfolio and leading market share.

And with more consumers working from home the same holds true for various connectivity products. We also added new skus to the sensation brand and had three of the top page and karaoke machines on Amazon including two of the top sellers are a our outdoor wireless speakers continue to perform well, and we have the new series scheduled to launch a month. Lastly the biometric segment in fiscal twenty. We again lowered overhead and remain focused on a few deals rather than wide net of opportunities many of these projects will to undergo validation tests in our fourth fiscal quarter and some in our current quarter.

Covid-19 fortunately delayed plants in the healthcare space. For example, testing has just resumed and should be completed in our second quarter the e-wallet alliance with SiriusXM Visa is still underway the projects with IGT as well. And we have a few others within the government and Computing Industries are new EXT wage. The revised NXT Solutions are now in the market and we have a new partnership with CMI Tech an iris recognition systems company with great Hardware Solutions wage combining their state-of-the-art Hardware with our Iris Software and algorithms We believe We will have by far the best and most competitive authentication systems on the market.

One of the first products from this new Arrangement will be a combination of Iris authentication and thermal sensor technology for temperature checks. It's designed for facilities. We're authorized is required. It is touchless and checks temperature and we'll bar even authorized entry. If I if a high temperature is present. We believe this solution to meet the needs of the current coverage environment and expect the first prototype in mid-july.

Has created a lot of inbound interest in I lock and Iris Biometrics with everyone wearing masks and gloves iris is quickly becoming the preferred choice for authentication off and the result is a renewed interest in my locks technology. And in the company facial recognition is also facing additional backlash given the events of recent weeks just bought last week IBM announced that they would no longer offer facial recognition technology and they are not the only ones to take this dance additionally in Q4. We engage an investment banker to support us in evaluating strategic alternatives for I lock this could be a spin-off a financing partner a joint venture or an outright same but I can assure you everything will be evaluated but I have to say while I locked business and corresponding sales have been slow to materialize. We remain close to age.

Finish line on some of the ventures I spoke about and now new interest is growing we did however take a non-cash right down on I locks and tangibles with debt maturing in August. We may consider converting debt into equity which would increase our ownership which we view as a positive given recent developments.

Overall few one will be slow due to covid-19.

I'll turn the call over to Mike now for the financial review and then I'll come back for some closing comments Mike.

Thanks Pat and good morning everyone. I'd like to Echo Pat's earlier comments with respect or covid-19. It is undoubtedly as impacted us all both personally and professionally and my best wishes are with you all during these unprecedented times on that note the pandemic thankfully have minimal impact on operations towards the end of Q4 but had more of an impact than our fiscal 2021 first quarter the majority of merchandising resources outside of the US and many of our vendors are operating in the Pacific Rim. Some factories have been closed and others have or are happening at less than Peak capacity. We have been working very closely with our partners to mitigate issues and we've been impressed with the patient which our teams and our partners have responded.

I'll also add that given the partial shutdown and some of our Automotive OEM customers and stay at home work orders for virtually all across the country less work is tied to the central business is spending environment certainly been impacted as well. This has and will cut into our net sales and we are actively managing and cutting costs to offset this on the other hand as Pat indicated earlier. He, sales or some of our consumer electronics segment products both accessories and Premium Auto have done quite well, and the interests of my lock has certainly picked up.

now for results both for the quarter and year

No all comparisons for the periods ended February 29th, 2020 and February 28th, 2019.

For the quarter comparisons net sales declined by six point four Billion automotive electronics segment sales were down 9.3 million due to the reasons back covered offset by a 3.1 million increase in consumer electronics within the C segment Clips was the primary driver with total eclipse product sales up almost 19% off product sales were down given the SKU rationalization programs and condition and discontinued product lines. We did. However see an increase in fourth-quarter comparisons for reception products. Products. So remote as well as for the activity brand trackers associated with uh, see motion program as more subscribers were added.

For the year net sales of 394.9 million were down $52 million and the automotive electronics segment was a bulk of it down forty seven point five million jobs programs had discussed with Ford and GM the anticipated decline wood Subaru and lower aftermarket sales with satellite radio the biggest aftermarket.

Well, the Consumer Electronics saying declined by 3.5 million for the comparable fiscal years. The segment did quite well considering the restructuring and realignment of the business and the global environment impacting a total eclipse group sales were up over 10% virtually all keyed product categories for Premium Auto domestically or up year-over-year General accessories sales were down participated given the exited product launch. We shut reception product sales with the biggest offsetting Factor up 17% year-over-year as we increase market share and expand wage distribution followed by activity trackers on a dollar basis as programs sales were up over 130% year-over-year.

Fiscal 2020 fourth-quarter gross margins of 28.2% increased by 610 points versus fiscal two 2019. This was driven by higher margins in the same segment and higher sales volumes relative to the automotive electronics segment as a percentage of our total mix.

For fiscal year comparisons gross margins have 27.8% for up 60 basis points compared to fiscal 2019 and 170 basis points compared to fiscal 2018 month. Well, we reported improvements for consecutive years the lower volume at Automotive which impacted absorption held back what we believe that business is capable of achieving a more normal conditions off as Car Sales increase a new programs kick in and as anticipated high margin dialogue business starts. Materialize We Believe investors will see positive impact of the changes we have made to Iraq to improve supply-chain efficiencies and improve margins with a better mix.

operating expenses

Rup, 9.1 million for the comparable for fourth-quarter. And there was a lot of moving pieces in both fiscal years and true operating expenses to run the business were down year-over-year as we continue to take us out.

We before the operating loss in the fourth quarter of fiscal twenty twenty thirty four point seven million, excluding non-cash impairment charges operating loss would have been four point five million.

And the fourth quarter of fiscal 2019 reported an operating loss of 30.4 million when you back out four point, six million of restructuring and $16 million related to non-cash charges operating loss would have been 9.8 million plus an improvement of 5.3 million.

On an annual basis, we reported operating loss of 49.5 million again. However, backing out non-cash impairment charges along with 2.3 million with executive stock grants. The true operating loss of the company was 16.6 million.

Keep in mind we had a big shortfall in the automotive segment, which was unanticipated so you can see without this the companies on the right tab.

For fiscal 2019 operating loss was 41.2 million less construction charges of 4.6 million 25.8 million Sonata parents and took the stock compensation is true operating loss of the company was 10.3 million.

We then other expenses and other income net. There were a number of factors to which are noted in our form 10-K to summarize briefly in fiscal twenty. We had 4.1 month on the sale of a German real estate an approximate 800,000 pick up on a prior investment in fiscal. Nineteen. We had a 16.5 million of non-cash impairment wage to the 360fly note and impairment of 3.5 million en Venezuela properties and approximate $500,000 loss on an investment.

Interest in Bank charges were down and a essay which is reported as equity and income of equity investor was profitable yet again, but down here over a year off time expenses and charges which we addressed last quarter.

Net loss attributable box was 21.8 million or a loss of $0.90 per share both basic and diluted in fiscal twenty fourth quarter.

This compares to a net loss attributable to Vox of 36.6 million or a loss of $1.50 per share basic and diluted in the fourth quarter of fiscal 1980.

The net loss attributable box of 26.4 million or a loss of $1.08 for basic and diluted share for fiscal 2020 compared to Los of 46.1 million or a loss of a dollar $89 for basic and diluted share the fiscal 219.

Lastly fiscal 2024 adjusted evidence of 1.8 million improved 5.5 million year-over-year and for fiscal year adjusted a bit of six months of the fiscal year adjusted evidence of 6.4 million declined by 7.3 million.

Moving on to the balance sheet cash and cash equivalents as of February 29th 2020 with 37.4 million. This is down from 58.5 million as of February 28th, 2019. But an increase of 5.3 million sequentially know in the fourth quarter of fiscal 2020. We use $16 in cash to fund the asset-purchase of vehicle safety holding score. We also use 2.7 million to fund the share repurchase program total debt as of February 29th, 2020 was a $22 million an improvement of 9.4 million year-over-year this consists of our Florida mortgage and our asset-based lending obligation to support operations.

Total long-term debt as of February 29th 2020 with 6.1 million as prepared to 5.8 million as of February 28th, 2019.

Lastly on June eleventh we entered into a new amended agreement with Wells Fargo Bank as Orlando agreement now extent and the agreement now ends on April 26th 2020 and it has been amended to 127.5 million as a maximum revolver amount plus an unused line fee equal to fifty basis points. We expect a form 8-k on this tomorrow.

I'm going to try to call back to Pat for closing remarks that thank you Mike. You know, it's it's challenging to forecast our business and with covid-19 that remote remains even more so but we've looked at different models and as we put our budget together this year. We took a conservative approach in our sales projection buying programs for the first half of the year. We are anticipating a slow start but also believe that as we move out of the second quarter based on new programs with Clips new placement history products new OEM programs beginning and hopefully a more stability in global markets will start to see not only growth but true leverage and earnings potential due to the impact of covid-19 in the first quarter. We have cut overhead aggressively and will only add back claws as business improves gross margins should hold off.

What typically steady our balance sheet remains in good shape, and we have access to Capital at attractive terms. This is a big asset for box as it provides us with a flexibility to move forward quickly should the right opportunity emerge and also provides us with greatest ability to run our business. This concludes our remarks and we are now he's ready to open it up for questions, excuse me, Pat. I I want to just clear it was April 2022. 20/20. I misread with before the bank to extend it to April 2022. Thank you. Okay operator.

Thank you. As a reminder to ask a question. You will need to press star one on your telephone to withdraw your question. Press the pound key. Please stand by while we compiled the queue and a roster. Birth question comes from Thomas, with Khan Brothers. Your line is now open good morning. You paid $16 in cash. I believe to buy Vehicle Safety. Is that correct? One six? Yes, six, and normally I would expect if I did an acquisition that I would happen like a 10% return hurdle rate. So I'm wondering is Vehicle Safety earning money? Are they going to earn 10% on a cash that you put into it? Where do you stand with that one the way way we looked at this program. They had they were profitable. They had a fairly strong Evil Dead.

Okay, and there are two aspects of the program with GSM one. They are a manufacturer. So moving their facility from New Jersey down to our Orlando operation will increase the absorption here in our building. So when we looked at the operation it is not only the eve of the that is being generated by choice because the SM rostra it's the additional absorption that will increase the overall margin for the OEM company here. And when in when looking at those two improvements off to our Consolidated statements, it's well above 10%

Okay. Well that's good to know putting the two together. You have one point six million dollars a benefit in some fashion from this deal than that, June 2nd and last question.

Island yeah, you know in the past I've asked you to hire an investment banker cuz I think I locks a very exciting company with the right investment banker a hungry investment banker the banker who does fields in the hundred to three hundred million range, very attractive piece of business, particularly an IPO and in this market where there's so many speculative

Companies that do IPOs and with the advantage that we have with Iraq.

Facial going out and all the rest of this I would think that this would be a great time for a speculative underwriter who do an IPO. I'm not getting you know plugging my homework from the underwriter and another one and maybe the sixty million dollars that we put into Island South forty percent of it. That's what we do. But I mean, I wouldn't give anybody and I bank or anybody else more than a month or two. They don't come up with anything. I say thank you very much. We're done with you will try somebody else but one of the issues that we have Tom is is covered by delayed a lot of meetings in-person meetings and everything else. So we really have to wait until people can come visit the operation meet with the teams and everything which which is now starting. I believe our first meeting is is schedule.

for the end of June so as

As the state's open up we'll be able to we have a number of companies that expressed interest sign ndas and things like that. But until we start engaging with the people and they can come in and and see the technology and everything else. You know, it's it's going to take some time. However, I could tell you the the banker that we selected have has deep experience in the biome space and very very good contract contacts with companies that are either using competitive Biometrics that may need to change or companies that have already expressed interest in Irish in in past. So we think we've got the right guy and I agree. He's hungry just to finish up on island, please.

So I wouldn't give this Banker, you know more than a few months cuz I think the window is open for an IPO now and if he doesn't do it get somebody else and I told you that the number of years ago a test client find a bank where you'll do it at no cost to them to put Iris recognition as opposed to, you know, putting your card in and all the rest of this and I think time is of the essence. I mean, this is this is the time I I see there's no there's no question time. I mean in light of what's happened with covid-19.

And I lock we have a opt-in system. Okay, that will be able to you know, authenticate through all whether you have masks or p p p p p e on and and is more secure than any system out there. But one of the big things is it's an opt-in system. This is not like facial. Well, we're we're seeing pushback on facial. You have to opt-in to be Beyond an Irish program. And I think that's something that's overlooked. But in in in the environment where I am now, I think that will become a strong Advantage. But if I were you I would pay a small bank and Florida to put in Iris in a branch or two and get you back up listening in the in the newspaper and on television and everything else. Well, we have a number of locations that have our Iris Biometrics, I think our, New Jersey

Is one that's going to bring us, you know, not only the latest and Hardware, okay, but also a very very competitive price. And with what I had mentioned obviously there are different iterations of systems that we can develop that will meet the needs of the marketplace given what the marketplace needs today.

I wish you luck. Thank you,

Thank you. Next question comes from Eric Landry with BML Capital your line is now open.

Good morning. Good morning. Thank you.

I just want to make clear is the is this Banker that you've engaged only looking at I lock or is he looking at options for the entire portfolio?

No, this is only for the I lock operation.

Okay, so then I say you talking about some someone timers in the past two quarters. I think it was a warranty issue. If I remember correctly. Correct. We past all that now. Yeah, they'll have some residual expenses that will come into this year. But the real impact that we're going to see and we're anticipating a little lower income from them based on the fact that Covetous of affected them in certain areas. Um, so but I you know, we we still think that they're going to generate a significant, you know portion of the page. It's all right. It looks to me like the the some of the bigger manufacturers are bouncing back quite strongly right now. Well right now what we're seeing in the car business if that's what you specifically talking about. I'm talking about it, but you can you can talk about the car business as well. If you like the car business is you know, obviously they were shut down in the first.

Quarter, so that's that's impacted us but as they open there's pretty strong demand is very very good promotions and we are already starting to see shortages of certain types of vehicles, like like trucks and things like that. So we believe as the manufacturer start to ramp up that will will will start to see some robust business in the you know, the end of the second quarter in the third quarter.

All right. So let me let me just give you a caveat on that the projected sales last year were somewhere around Seventeen million cars and trucks like trucks this year. It's is the estimate is anywhere, you know between 14 and 16 million, so it will be down from last year. The number of vehicles sold in the US.

That you mentioned something earlier in the call. Like you folks. They're believed that the combination of CMI Tech and I lock provides this month Venture with by far the best. I think you said technology in the in the authentication. Yeah, we believe that okay. Okay. So what what can you what can you point off as Outsiders who see, you know, no sales or anything like that. Where can you point us to look to Thursday so that we can be confident that indeed. This combination does have the best technology in the business. Where can we look is Outsider to figure that out. The we look we are located. We do have our equipment in in various Banks and we have a visit in locker rooms of NBA teams and things like that, but I think on a go-forward birth

Is when you're looking at I lock.

The as I said, we believe that I I lock has come to the Forefront now, but what makes you believe that what what is it that makes you believe that I lock is better than everybody else. Well these let's put it this way the the first off the interest we're getting since covid-19 you're wearing a mask when you're in a hospital and you have all the PPE on okay and you walk up and you have gloves on and now you have to give you fingerprint or now, you have to show your face to either open a medical cabinet or open a door or anything. You've got to take equal off to take your mask off and everything else. I lock would require none of that. Okay, it's touchless. It's touchless and even if your face is covered which as you age you've seen some of the pictures of what PPE looks like you will see that the eyes are clear and we will be able to see the eyes and authenticate. That's that's a big Advantage wage.

Or that technology, right? But let me interrupt you. So what you're talking about is Iris relative to face what I thought you were interesting it earlier in the call. Yeah. What I thought you were indicating earlier in the call. Is this Iris relative or I lock relative to the other Irish players had the best technology in the business. Did I misinterpret that? No. No because it's off today iris is just as competitive as facial and and or fingerprint the advantages that you have with iris is we use a double live. I scan them in case of facial. Okay apples 3D facial their claim is 1 + 1.1, + 1.1 million false positive, but we use a double live. I scan and that double live I scan gives us one in over two point five trillion false positives. Yep.

So it's the most secure by you know biometric on the market short of DNA. So that's the advantage. It's more secure. It's just is convenient. It works better in places where people have faced coming your face coverings on Masters things like that. We believe in today's environment. It's opt-in requirement wage is something you know, that that takes care of a number of privacy concerns that people have so when you put it all together, this has emerged in our estimation off as one of if not the best Iris Biometrics Solution on the market.

I understand all that, but if I lock technology is no better than or perhaps be 3 or to someone like Irish Pub or Princeton or all the other Irish players. It doesn't get you very far. So what I thought you were saying earlier in the call is that you believe that I locked technology is better than the other Irish players, but perhaps you weren't saying that yes, I am saying that as well when we look at our EXT when we look at our standoff distance against all the other Irish players. We exceeds their capability.

And that's in.

Party tests. Okay. So there is a test. There's a study out there that we can reference that will indicate that indeed the I lock stuff is better than what everybody else has tested better. Yes. Okay. All right. Thank you. You're welcome.

Thank you. All right. Next question comes from holding AG.

Good morning, Pat. Good morning gentlemen, and I have to be here.

You know want to focus a Nylock quick a little bit too looking at your balance sheet, which filter balance sheet 441 million two hundred Seventeen million current wage paying those about two hundred twenty four million somewhere. I lock valuation is buried how much of this roughly $224 million non-current assets which have good will have intangible assets cetera is I lock so in other words, what's the valley valuation of I lock on your Consolidated balance sheet as of the end of February?

Okay, Mike you got that number. Yes, if you want to take a by the way, I'm page ninety-two. You'll see your full outline of how I left his Carriage separately. But when we consolidate Life Lock in there's not a substantial amount carried his value on our balance sheet.

In fact, we had written off the tangibles as of February 29th 2020.

So in other words, you're basically saying that on this Consolidated balance sheet you are having your interest in I lock with you know, not it's not a channel amount, you know, in other words. I mean if I look at the value of a hundred or two hundred million is easy another five to ten dollar just I lock so I mean, uh, so basically the investor-owned 992 can find that out. But uh, am I correct to say that I locks valuation, which I considered to be the most important asset which the company has often given time. It's basically on the balance sheet with you know, a non-material amount, uh reflected. Well, the only thing the only thing there but that would mean the debt that we carry on the books for I lock which we would then be able to convert.

I'm sad but you have that Consolidated, you know, so I mean that's your liabilities. That's right. So I mean, I mean that's sort of good news, but sort of surprising, you know, so but understand that's gap. You know, my other question is, you know, is there any you know dialogue context for example, the Sirus XM contract with I lock is there any update there? I mean that that was kind of like a nicely featured by you a little while ago anything happens if I examine dialoguing unfortunately due to covid-19.

Okay.

This and so but it's still going on the CMI partnership. I mean, you know, there is exclusive distribution rights Etc. Besides that or there any other direct benefits do I lock? You know, how do you think this partnership will improve the current? I lock products? I mean, it's a little bit. I mean see em, I I mean again a great news for box-office dialogue, but it's a little bit difficult for you know, an investor to understand what the CI my CMI partnership really does for I lock for you know our company. Well first off first thing is that their their Hardware solution is state-of-the-art and and it saves us from going out and redeveloping some of our perimeter access products. So it saves them a fair amount of R&D work in in developing our next generation of perimeter access products the key there though is their ability to move quickly dead.

And as the market changes and you know, the reason why I referenced a new product that will see prototypes in in in in July is that off this was a direct result of them being able to move quickly because of their manufacturing capability and us being able to work closely with them to Thursday and our algorithms in bed are solutions in their in their product to bring something quite novel to the to the marketplace in a relatively short period of time. That's the advantage plus there are certain Market places that they serve that we believe would would be helpful to the ilog technology and program because of their reach that we don't have

Okay, got it. You know so I mean not a question, you know, the Fire TV partnership is Amazon what happened there? And is that part of the 375 million new Automotive contract, you know the yeah, let's see. We started with the FCA program and you know Amazon and working with Amazon to bring Fire TV to the car is a an important program from them. They noted they noted our position in the marketplace for rear seat entertainment and we should be able to put a collaboration program together where we'll be able to have Fire TV in the car sometime in the middle of next year.

Okay. So what happened to me is that total? I mean, you know, the children's safety Vehicles product haven't seen that in the tank k-bap. We continue to work on solo again our our game plan coming in after the show was to visit all our key customers for demonstrations discussion as to how they would want to see a system like that configured that was all put on hold as the company's shut down. So that's that that program will be a rejection, you know, that will start as soon as we can get in. There are a number of companies that are still not allowing visitors into their operations. So as soon as we can open up an app and get those demonstrations done get those engineering meetings done. I would be able to report better as to where we are there that problem of birth.

hot car deaths

Is not going to go away. So we will continue to develop that you know with any interested OEM that we can generate.

You know when I eat analyzed I mean obviously as always in situations like this, it was only tonight to look into your release of yesterday, but something jumped out this that value Revenue overall only decreased by 11% and your growth probably marching by and large remain stable. You repeat the armor decreased by almost stalls, um, is that uh, maybe for the CFO? Uh, what's the reason behind that? You know, I mean, normally it's an eleven percent, you know, um money Revenue decreased stable margins. I wouldn't see, you know detail decreased by almost all

Go ahead Mike. I'm so I'm sorry I didn't I didn't understand the question know when I looked at, you know you. L. I'm seeing that your Revenue decreased by 11% your gross margin remains overall stable but u e b t are Marching decrease by about half hour almost half. What's the reason for that month on the edit? Well as they what's happened that the margin went down as we're we're the overhead didn't come down as fast as the sales came down and we put into a lot of faith in the fourth quarter. We dressed reducing the overhead.

Which really what's driving that number?

Very significant, you know, so so you're basically saying and you know, I noted well that and talk regulation. But and and thanks for that that you aligned your you know compensation much better with the company's performance. But still, you know, the seeing DVT are decreasing that much compared to the year ago, uh such as that the operating expenses are way too high and I think you gave that answer came to the same not only conclusion, you know that that's the case. So, uh will we see that adjustment in q1 some of the year now or I mean, what did you do to you know, uh adjust operating expenses, uh more with um, you know revenues well that song that goes with you know, what happened with covid-19 sauce coming. We aggressively took out a lot of Market we furloughed dead.

Over a hundred and fifty people in the United States refer load according to German laws a number of people in in Germany as well. We've taken cross board pay cuts, not only the executive level but all remaining employees. So what we think we've done there is that we took a very aggressive because we thought the cobit situation would be much worse than it's actually turning out to be and we we we cut overhead very very deeply but as we seem business start to come back and and we get busier we're going to have to bring some of it back but my anticipation is not we will not bring it all back and it will be significant reduction in overhead year-over-year.

Okay. Thank you for some of the benefits got it.

Yeah, listening to previous calls. One of the favorites was you stock buyback program. And as you all know, I mean you start a book values and what I appreciate it is, you know, the conservative makeup of the balance sheet was literally know that however, I mean having you know, uh a stock price which is off whenever you're located corner or sort of Book value and having the availability to buy stock back and you mention it all the time. You have a program etcetera, but it looks like that you're you know, very careful or very reluctant to really exercise it and I mean, look, I'm a big fan of solid balance sheets and admire you for that. I mean our local Fox will not go under but for shareholders, you know to see a stock, you know at a certain valuation and then even to learn that I lock you know, which is probably one of the best products which any birth

Can have any covid-19. It's literally not valued on that balance sheet. I mean, I'm just wondering looking at the operation operational losses. Why aren't you I wouldn't even say more aggressive or violent you pursuing more you share buyback program because I mean, you know, it's hard in this world with covid-19 and everything to make money in any business. But you know, the easiest for you is, you know by your own stock back with ample, you know balance sheet strength and make a profit. You know, I mean, I personally asked the largest shareholder on record for the company, but probably even pay a bonus for that, you know, because that would be relatively easy. So I'm asking you again like others before me before I participated in those calls asked you want to you know more about yeah, I'm saying it again aggressively buying your uh a stock back at the moment, you know, so I'm still, you know, having a very very solid balance sheet.

Well, this is where we are right now. We believe that they're the thing that has consistently and always drove the share price for this come back up was improving ibadah. Okay, and we can do all the you know moves that we could make on lowering the outstanding shares doing BuyBacks and everything. But the one thing over the entire time where we have been a public company our share price moved when are either the moved up in our Focus here now is to at this point, although we bought 581000 shares back last year off our points on a go-forward basis here is to pick up some synergistic operations that will improve our even improve our Market position dead.

And we think at this.

Time in light of what's happened with covid-19 potential of acquiring some good brands good Market good sales. Good margin wage are are are present and let's see, you know what develops and if we see something really good, we're going to move on it off. If we don't we probably will continue our our buyback program, but I believe that there are going to be opportunities that are facing us that are going to be very very worthwhile to move on.

And willing password.

I mean, it looks fine. But I mean, I think I would love to see from the CFO for you. When you see an opportunity if that opportunity really shows potential which is off and buying stock back for 570 or five fifty or five bucks. You know, how do you have evaluation of almost triple just on your books with I lock even having a significant value, you know, I mean, I'm I'm not a fan always of share Buybacks in general. I mean I think often could have used but it's very very rare that the company has a market valuation which is a third of birth has a balance sheet, which is almost literally just Equity hasn't valued I lock at any significant point which we all believe and hope that's a very significant value. You know, I'm not so sure. I mean if I looked at your accusation in January, if if you could compete with your own, you know stock by buying it back, you know for present value age.

The market and then look in five years. What would have been better? At least on your books? I mean as you're going back to profitability or you know, uh the safety company which wage but the jury is out on that, but thank you for your answer that okay. Thank you. And this is and I'd like to add to patch, as well in terms of BuyBacks Frank morning, Good morning. I hope you're well. I hope you're bound to thank you buy back good strategies. However, I honestly believe we have much better used for our cash and Drug Capital than buying stock people give a short-term boost to the stock. We had plans for long-term development. We will looking at some new possibilities for the use of our cash is going to be much more valuable than buying back stock at this time off.

That's I think that's very important for us to use our balance sheet and our strength to improve sales and to improve our profitability and add to our operations team. So for the time being I don't think it's good strategy for us to use up our cash to buy it back stock with six months from that unless everything else materializes would have no impact on the stock. Sorry John. I mean from an entrepreneur is, you know, six Decades of experience with the reputation of you off. I like to hear that, you know, but we will test you in a year and two years if that was the case and I think maybe in the meantime, I will just continue or consider to buy the stock which you are not doing which may have the same effect, you know for sharing at the end, you know, because sincerely if you can really make more money, you know by buying, you know, long-term and sustainable assets with your wage.

um, you know balance sheet with your resources, uh, then I uh essentially would consider on my

Side you continue to buy this stock, which I think as a triple value and then I think we'll reach the goal for everybody the same, you know, so, uh, but you still are telling investors in all your communication that you have a share buyback program and I was just wondering why you are you know through love simply issuing it that this favorable evaluations based on your own balance sheet took out even I'll talk about youth in there and having said that uh, I accept your answer. I mean, you're great entrepreneur and uh, I think you know the devaluation box and its future depends a lot on your credibility and on your accomplishment and and if you're saying that you can find better, you know Investments for the resources of blocks than buying back stock. I take that but we'll test it to

Well, that's exactly that's exactly the strategy and we're aware of many pending developments. We experiencing strong growth in some of our operations. We have major major developments coming into our Automotive Group next year. All of these things will require substantial Capital which would not have available. It will serve us a good deal better than owning more shares than we now have so they depend on you to execute the buyback program. Thank you God as I I didn't actually see, you know disclosure. I am prayerfully considering it. But because I have already around four million shares and on record. I'm probably the largest shareholder I would go I would go slowly if at all, you know, so, uh, I think but but but but I'm pleased with your uh spirit and uh from your mouse club

I think yeah, I mean, I'm sure that's better Investments than walks talk. But looking forward to the proof of pets and you said Thank you. Thank you very much. We appreciate your continuing support and interest in box. Thank you very much.

Thank you. All right. Next question comes from David Cohen with Midwood open. I just I didn't catch all of the prepared remarks. I was wondering if there any prepared remarks that address the the first quarter now that is actually over given the timing of this call on a fourth-quarter results. We you know, obviously the First Choice everybody knows is going to be impacted by what's happened with Cobra, you know, the car manufacturers were shut down many of the dealerships was shut down. So what I thought it is we're going to have a slow start in the first quarter, but we will have our first quarter call will be sometime the middle of next month will be able to go in more details with you.

right well

But I mean, I can understand that related to Automotive. But can you what sort of General comment? Can you make at this point about consumer electronics and the first quarter consumer electronics perform pretty sure we had because of the the switch over to online business. We did not you know, we we had access to markets job markets were very active during that period so we had some positive surprises and we expect although you know, it it was better than what we had. She had originally forecasted. But you know, we expect to see the, you know, the Christmas the third quarter which is which is really our Christmas quarter-page really start to improve based on the additional distribution that was added during the and and a lot of it being online during the three months off.

Of you know the shutdown.

Okay. Thanks. You're welcome.

Thank you. As a reminder to ask a question. You will need to press star one on your telephone. Our next question comes from Brad Leonard with the ml Capital Management. Caroline is now open. Hey, thanks for the question. So Pat, I'm just a couple of things here on and you said your stock is you know, risen when you're even just resident even has been going down for a long time. I mean, I don't know the last time it's been up year-over-year, maybe six or seven years. I know there's a lot of charges in there, but I'm just looking at

That they don't on my icon. So, you know, you can talk about this and yes, this is great to have you been to going up but it's not just improved its improved Eva two or Yvette per share. So if you issue more shares

To buy something or whatever that's not necessarily better than buying back stock. I mean what is increasing even to per share like the highest level? So I think that's important to point out. I sure you guys know that but just, you know going out and doing Acquisitions and having to go up if you have to issue a bunch of shares is not helping shareholders at all. I can tell you I can tell you that I don't think we've ever purchased so maybe one purchase we've done in years past that we use shares. We normally use cash. Look when you look at our business our business runs in Cycles wage and and because of that we have Diversified over the years a disruptive technology could impact his business or wipe out a complete category in short order. So to protect against that we've Diversified many years ago to prevent anyone shocked from being a company killer and we've seen company Killers over the years some years the total business wage.

Maybe with the recession all the groups are going to be down.

But many years you've got some up some down depending on the influences in their Market in good years. All of our operations are moving in the right direction. And I believe that we might be entering into that cycle. Now with the new Automotive programs that we have the the additional distribution that we have escalated for. Our commercial teams. Are are are Consumer Electronic teams and the interest that we see to either drive more sales of June. I log products or create a situation where maybe we do something with another partner to move this technology along quicker. Maybe we do a spin off and have it come off our books, but that's the way our business runs. It's been running like that for forty years, but it was designed. Yep.

So that you know being in the electronics business you can have a technology that can wipe you out in in short order and we've been set up to do that. We've been here since nineteen sixty and the times when the stocks really move is when everybody's moving in the right direction and the but there's growing why I understand that and I don't disagree with and and I understand the nature of the business but you know creating a long-term shareholder value is not been we have not been successful in this right and so the stock is is where it is, So I understand the ups and downs of the cycle and that's your job to manage it. Um, I don't have to choose the investment but you know, so we are where we are on your auto business. If your phone numbers that you guys throughout their remind me again, this is not a guaranteed number. This is based on projections of a certain amount of cars are going to sell is that correct? That's exactly right. It's based on projections of what they're going to sell of the cars that we are on birth.

Okay, so hopefully that comes in it may not come into that amount. That's the difference is this is not an accessory program for the FCA program with tier one so that they know how many cars are going to build it going to build those cars. And so it's in our estimation. It's a much tighter number than you're supplying an accessory that a car dealer can get them from the manufacturer. They have certain trim levels that our equipment is going to be on and we can count to those numbers of vehicles that they're going to make that's going to carry the product but what if they don't even have so many vehicles? Well, look that's that's always that's always a possibility. They don't know how many they're going to build in two years. They may have budgets but they don't know for sure. So I'll take a look even if we had contracts they were going to take so much those changes. Okay. So back to creating value here. So you guys have claimed in the past.

So that the clutch business is worth more than you paid for it. So that's like eight bucks this year. So if you were really serious about creating a bunch of value you could say hey we're

Going to buy a bunch of stock back at four and five dollars a share and then we're just going to go out and Market Clips in a year and we think it's worth more. We've told everybody that and we're going to see so if you bought back a bunch of shares at four or five bucks and then you go out Clips or eight or nine dollars you created a lot of value and it's just contingent Arbitrage, right? And so I mean, you know, it is what it is if we're really serious about it and creating value versus building a bigger company that may not be more valuable. I think you could do that. So that's my thoughts on that. We discussed that a year ago and you know a year later. We're kind of still dead hoping for better things in the future. Who's the banker. Can you guys say who the banker is?

Yeah, we've you know, this is not something I would want to get into at this point as we get more involved, you know with some of the people that were were visiting in the age with I made let that out. Well companies usually with they go through some sort of a process on a review of a business line and often times. They announced that they've hired you know, whoever Goldman and Merrill I don't know off so I don't see whatever is fine we can get into it. Okay. All right. So lastly on the I lock in this discussion about it's better. I understand the price with the facial recognition, you know with all the PPE masked whatever but he's wearing so but what about against something like one of your competitors and I know it's not a direct competitor wage by which is now called I don't know what they call themselves. So laws are the laws or whatever they are. So Wells Fargo has that built into their app for their mobile banking.

So it works fine. I have a Wells Fargo account, you know opens up on my app scans it it works. So I mean, why is your product better than their life, you know in the in the case of where we where we have great strength over others is outdoor. Okay, because of the technology that we have the licenses that we have the licenses Thursday. We have are not available to everyone in the Irish space. The other is is that are standoff distance depending on the application is the greatest that we've seen of any Iris biometric wage. Um, and that standoff distance is going to give you more flexibility in the number of applications that you can use Iris. So when we compare ourselves to other Irish companies and believe me look at all the other technology we see that our systems are far superior and therefore in testing and things. Yep.

That if we were up against another Irish company testing a depending on the application, um, you know, if it's outdoor, we'll we're going to live if it's a standoff distance is not have to be right up front like a phone. We're going to win it because our technology is simply better.

Zou mean your product works better further away than the others. Yes. Okay, we've had programs with the military where we've run. I don't know fifty Army month, um Personnel through an H box where we had a program that we sold last year RH box and they they caught all fifty of them in a minute. It's a different issue. It's it's it's different technology that we use that allows us to to have a much better standard of distance. Okay, that's all I have. Thanks for the answer. Thank you.

Thank you.

Next question comes from Thomas, with Khan Brothers. Your line is now open. Thank you.

To Cali and science of Khan Brothers upwards of thirty or forty per-cent of fox. Yeah. So, of course we walk with our clients on Thirty or forty percent of fox. I the Cali says should carry some weight and what I say should carry some weight off. I always has don't follow where you know got a bloody head here. But as far as I lock goes if we bought a Kia from the and nothing's happened with we slowly going to miss whatever opportunity we have. So I'm encouraging you. I don't know what bank are you have them hungry enough or whatever, but when I see all these speculative

place with companies lose money and they don't have a little Sizzle but nothing and then I see that

How much should we put into I lock em, I don't get our money back maybe.

Have upside I think you know, this is the window and gone now you're listening and you are the man, but it's up to you John push somebody to get this off so we can get back our sixty billion dollars still maintains some website. Thank you.

That's the game plan.

Okay.

operator any further questions

I'm not showing any further questions.

Okay, I want to thank you all for your interest in box. We had some very interesting conversations today. We are feeling good about what we're seeing in a wage and in the next few months, so I look forward to talking to you all again next month and until then stay safe.

These and gentlemen. This concludes today's conference call. Thank you for participating. You may not disconnect.

Dead dead dead.