Q1 2020 Earnings Call
Only the conferencing centre a conference coordinator will be with you momentarily. Thank you.
I mean I'm your conference I'd number please.
Neil will once again.
Okay.
Six six.
Okay.
908.
Okay. Thank you and me I have the spelling of your first and last name. Please.
First name is 10, KPN last name et cetera.
Anyway.
Okay. Thank you and May have your company name. Please.
Era Inc. a I.E.R.A.
Okay. Thank you I'll go ahead and Johnny.
Thank you.
You're welcome vehicle launches.
Our Q1 results reflect this.
OEM sales were down 8.1 million year over year to vehicle launches were delayed by customers lower sales at one of our major OEM customers left them with higher inventory and reduced their purchases from us and finally, another OE dropped passive entry products from their line, though this last piece was accounted for in our budgeting process.
Aftermarket sales were also affected by lower vehicle sales and were down $1.9 million or just over 11%.
Although satellite radio which continues to move to the OE side accounted for more than half of that decline.
For Vox the decline in the auto market, we will certainly impact this fiscal year, but long term. This is not a major concern as our position with our OEM customers remains strong.
We're adding new vehicles for our evil rear seat entertainment systems and are in discussions with new OEM partners, which if they materialize would positively impact our business in the years ahead.
Our refined technology is also making steady progress and should positively impact next year's segment sales. Additionally, the good news from what we are seeing overall is that you are the buyers are gravitating towards equity as you Ve and pickup trucks. This year, which is more heavily weighted to our current business model.
On consumer Electronics segment, which consists of our former premium audio segment and the consumer accessories segment less I laugh.
They performed well in the first quarter net sales were up $2.7 million year over year in Q1 with premium audio product sales up $4.3 million or over 13%.
We saw a significant increase in the sale of premium home separate speakers mobility products and our premium commercial speakers the commercial business should be a source of growth. This year as we have expanded distribution and see higher volume for our Margaritaville resort projects.
Additionally, a few weeks ago, we announced a distribution partnership with snap Avi, becoming their exclusive national custom installation distribution partner for speakers in the United States.
Klipsch will join snap Avi his own brand of episode speakers in their portfolio and will be available for purchase in August which will start contributing to our performance in the end of Q2 and over the first year 12 months should generate an additional $10 million in new revenue with growth projected thereafter.
We ran a successful pilot with the dish and last month, just launched on their on Tech Smart home services, a new direct to consumer Smart home solutions brand, where on tech will provide consumers with professional installation set up and education for the latest smart home devices and entertainment systems. This new business places clips as one of two audio brands on all dish on tuck on tech trucks, providing sound bars, and multi room audio along with a good better best passive speaker offering.
Our clips one GBA.
We will be going into all trucks, beginning in November and we will begin contributing to our Q4 results.
Another positive development announced last week as Klipsch will begin selling a limited assortment of its headphones tabletop speakers and sound bars online and to select retailers in China.
We will offer these products on team all dot com the world's second largest E. Commerce site effective immediately with plans to expand online distribution and to select retailers websites in the fall.
We will be selling online initially managing inventory accordingly, and building marketing campaigns to expand Klipsch is premium brand equity and one of the world's fastest growing economies.
Staying within the consumer electronics segment other C product sales were down.
And but keep in mind, we had a lot of discontinued products and deemphasize several product categories. Many of the categories. We are focusing on grew in Q1 year over year, helping to offset lower sales as a result of reduced SK SK use. Additionally, total Germany sales were down $1.6 million for the comparable Q1 periods. So our domestic business was essentially flat, which is a positive giving the declines in recent years.
Just a few things to highlight how the total audio sales increased by close to 5 million as we added Costco, Canada as a distribution partner for our acoustic research outdoor speakers. We also saw an increase in sales of karaoke products under a same station brand due to expanded offerings and higher sales via Amazon.
Sales of the hook up reception and remotes were down approximately 300000, where much of the S.K. you rationalization took place in the hookup category.
Reception, which is an area we remain focused on giving our strong technology, our brands and our customer base grew close to 15% year over year as some of our new products exceeded expectation, particularly at Walmart.
General accessories, which consists of just about everything else less our wearable category was where we have the decline domestically and that is in line with our strategy and that strategy is to focus on higher margin longer lifecycle and more sustainable product categories.
And lastly, healthcare and the wearable category.
Or that serves as the distribution partner in support of the Unitedhealthcares motion program handling the distribution and logistical support for wearable devices for Apple Fitbit, Samsung Garmin and strive.
During Q1, we saw a 1.2 million sales increase year over year as more members were added to the motion program and we added Apple product, which was not part of the prior year's results. This program and our position overall in wearable category. The category is expected to drive nice growth for box in the coming fiscal year and the year is that fall.
Within the biometric segment.
Essentially we had no revenue for the quarter as we had orders for both XT and NXT products, but did not have the inventory to ship in Q1.
NXT fees were being modified and upgraded and the expertise. We are just about to be launched both situations have since been remedied and we began shipping both solutions to customers in the healthcare financial services and education education verticals in June .
As we noted on our last call. We also had orders for the via touch AI vending machine, but.
Touch manufacturing delays had stunted shipments that too has been rectified and we shipped our first 250000 units for this year in June with more to follow throughout the year based on projected pilots launches and marketing activities of via touch we're also making progress on the healthcare side.
Though we are still not in a position to provide specific details as we are currently in contractual negotiations. We believe that by next quarter, we will be in a position to begin talking about the program and anticipated contributions.
On the physical security side, our focus over the next two to three quarters will be on health care financial services education. As this is where the greatest volume of near term opportunities exist.
On the embedded side, our focus will be in health care and with various security applications.
There is also a new development on the automotive side that we are working on and this is a new application incorporating high locks embedded solution in vehicle.
But this is in the early stage of development similar to other pilot and prototype projects. We are engaged on.
But this one we should be demonstrating samples and things that this year is coming.
CES show.
Eyelock should start generating more revenue in the coming quarters and losses are anticipated to decline throughout the year. As we are now true truly moving from R&D to commercialization.
And just a few more comments before I turn the call over to Mike.
In our earnings release yesterday, we announced new employing employment agreements for Mike store, Lorianne Shelton, our COO and for myself.
We had an independent compensation benefits advisory firm working with us to determine best practices and to further align key executives with shareholders.
In all agreements you will see that bonuses will now be paid on adjusted EBITDA, whereas our past bonuses were based on pre tax net income.
This was done to align further compensation with more of a true operating figure and there are different calculations for each of US based on meeting minimum adjusted EBITDA thresholds. Additionally, my stock compensation will increase as part of the new agreement with terms and conditions set forth in the agreement and based on our stock price exceeding $5 per share per share during the five year employment term.
The goal is to further align my interests with shareholders, which this new agreement accomplishes.
And as a reminder, John Shalam has agreed to forgo his annual bonus and remains the largest shareholder and blocks.
As a follow up to the share repurchase program I just wanted to point out that we were precluded from purchasing stock. After the program was announced and intend to execute on this program. Once the window opens as we believe our stock at present value represents a strong investment for the company.
Subject to the completion of a financing contingency we remain on track to close our previously announced sale of our German accessories business on and around August 31st which will further strengthen our task.
Position and balance sheet.
The transaction is expected to generate approximately $19 million in gross proceeds with the final purchase price subject to further net cash and working capital requirements.
At the same time, we expect to remove approximately 30 million in revenue and a little over 3 million and adjusted EBITDA on an annual basis. Once the transaction is complete.
Additionally, the potential to generate 2.4 million euro exist. There is an option agreement granting a chip company in the right to purchase the real estate property in Langurs and.
Which.
We expect that this will close just pending the resolution of an environmental study.
And this is going to be a subsequent event to the transaction.
In May we signed a nonbinding yellow light to sell our real estate and pull heim, Germany with anticipated gross proceeds of $12 million. This past Monday, the parties entered into a formal purchase and transfer agreement for the sale of the pull line property, which is expected to close in the fall.
We are continuing to look at acquisitions. Our current focus is on strengthening our consumer and automotive electronics segments and there are a number of companies that we have identified and have been in discussions with nothing is eminent.
But our strategy, while divesting is to replace sales EBITDA and cash flow and finally companies that may may enable us to leverage our infrastructure and generate even more synergies and profitability.
And lastly, the board is continuing to evaluate the benefits and timing of declaring a dividend we believe the share repurchase program and dividend.
Represent good uses of capital.
And we would like to get through the next few quarters and see how our business performs and what other corporate events may come about but I want you to know this is part of our strategy.
Im going to turn the call over to Mike now to review some of the quarterly numbers and our balance sheet and then we'll come back for.
Questions. Thanks, Pat just a little clarity the shipments in June for the biotech is 250 units not 250000.
Sorry.
Good morning, everyone. As a reminder, we changed our segment reporting structure effective March 1st the first day of our fiscal year and our results of operations take into account the segments of automotive electronics consumer electronics and biometrics.
All PML comparisons are based on the first quarter ended May 31, 2019, and May 31 2018.
We reported net sales of 93.5 million compared to 100.9 million a decline of $7.4 million automotive electronics segment sales were $29.6 million.
A decline of 10 million and biometric segment sales were down approximately $200000.
This was partially offset by a 2.7 million increase in our consumer electronics segment.
Pat provided the key drivers for the year over year variances.
Consolidated gross margins at 27.8% or up 40 basis points on a segment basis automotive electronic gross margins were 22.4% down 280 basis points due primarily to declines in OEM security and remote stock product sales.
As well as the aftermarket headrest products as these products typically generate higher gross margins.
Sales of certain aftermarket security products contributed favorably favourably to the segment margins for the quarter as did lower volumes of satellite radio product sales.
Consumer electronics segment gross margins of 30% increased by 130 basis points, driven by higher sales of premium homes separate speakers mobility products and commercial speakers as well as higher margins of karaoke products.
Offsetting factors within the segments included lower European margins caused by changes in product mix discounts offered on certain products in fiscal 2021st quarter, which was not offered in the prior year period.
Biometric segment gross margins were up but again sales are immaterial and the increase was a result of the release of inventory reserves and the fiscal 2021st quarter.
This remains a high gross margin offering as we begin to ramp up sales. This year, we expect positive contributions.
Total operating expenses of 33.1 million increased 400000 year over year.
However in last years fiscal first quarter, we had approximately $2.1 million and reimbursement of legal fees.
Excluding this year over year operating expenses were down $1.7 million.
Selling expenses of $9.9 million declined by 800000 due to a decline in commissions based on lower sales.
A decline in salesmen salaries, resulting from the restructuring and other declines throughout our business due to lower headcount.
We also had lower advertising costs and display amortization expense as many displacing pictures of fully amortized.
This was partially offset by new hires and approximately 200000 and approximately 200000 for employees that shifted from DNA to selling related to restructuring initiatives.
General and administrative expenses of $17.4 million increased by 1.3 million. So I would note the $2.1 million reimbursement I. Just spoke of is included within our fiscal 2019, DNA and excluding this DNA was down approximately $800000.
We also had a decrease in salary expense due to lower headcounts and the transfer of certain employees to selling as noted above.
Engineering, and technical support expenses of $5.8 million or roughly in line with the prior year down approximately 100000.
We had higher engineering labor costs in our automotive segment offset by lower engineering labor costs in our consumer electronics segment.
Within the CE segment, R&D increased to support new product launches and within our biometric segment R&D declined as the majority of the products are now nearly completed.
On an operating basis, we lost $7.1 million versus $5 million in fiscal 2019 first quarter, excluding the 2.1 million reimbursement of legal fees in fiscal 2019 first quarter operating losses would have been roughly in line with for the comparable periods.
With respect to tell with respect to total in other income net we had 2.1 million and total other income in the fiscal 2021st quarter compared to $1.4 million in the comparable year ago period.
Interest and bank charges declined by approximately 100000 due to amendment and our Wells Fargo lending agreement in which the fees changes charges for unused portion of line of credit will load.
And as we stated we currently have no borrowings outstanding on our domestic credit facility.
Equity in income of equity Investees declined by approximately 400000.
Due to partially due to lower sales the impact of tariffs and certain product recall expenses incurred in this fiscal year that were not present in the first quarter of last fiscal year.
This resulted in a pre tax loss of $5 million in fiscal 2021st quarter versus a pre tax loss of $3.7 million in the comparable period a year ago period.
We recorded an income tax benefit of $2.6 million in the fiscal 2021st quarter compared to $1.1 million in the fiscal 2019 first quarter.
The effective tax rate for the three months ended May 31, 2019 was an income tax benefit of 52.7% compared to 30.4% in the comparable period last year.
The effective tax rate differs from the statutory rate of 21% primarily due to the immediate use taxation of foreign earnings foreign earnings non controlling interest related to Eyelock LLC.
State and local income taxes, nondeductible permanent differences and income tax and foreign jurisdictions foreign jurisdictions at varying tax rates.
In addition, the valuation allowance primarily increase for us tax credits for which no income tax benefit can be recognized.
The estimated annual effective tax rate for fiscal 2020 is 54.2% and is based on our annual pre tax income forecast, which includes profitable jurisdictions anticipating an interim tax provision and loss jurisdictions for which a limited tax cash benefit can be recognized.
If the annual pre tax income forecast is achieved for the remainder of the fiscal year. The company anticipates, recognizing an income tax provision in the subsequent quarters of fiscal 2020.
Net loss attributed to Voxx was $1.1 million and this fiscal years first quarter.
Compared to a net loss attributable to Voxx of approximately 900000 in the comparable period last year or a loss per basic and diluted shares of five cents versus a loss of four cents.
Lastly, we reported an adjusted EBITDA loss of 800000 for fiscal 2021st quarter versus adjusted EBITDA of $1.5 million or 2.2 million decline.
This was due to lower sales and higher expenses expenses, which included the onetime settlement reimbursement and offset by higher offset by higher gross margins and other income net.
As for the balance sheet cash and cash equivalents as of May 31, 2019, with $60 million up 1.8 million since fiscal year end at February 28.
On a year over year basis, compared to May 31, 2018, our cash and cash equivalents increased by $10.2 million.
With the two transactions, we announced and upon the closing of each we expect cash to increase by approximately $30 million.
Based on working capital adjustments and related fees and net of closing costs and margins.
Also note the international accessories sale includes the option to purchase real estate and could generate an additional 2.2 million based on the current euro to us dollar conversion net of fees.
Total debt as of May 31, 2019 was $16 million as compared to 17.6 million as of February 28 2019.
An improvement of $1.6 million.
The Companys total debt consist of mortgages related to our domestic and international properties and a euro asset based lending optimization to support our German operations.
Total long term debt as of May 31, 2019, with $7.5 million as it compared to 7.6 million as of February 28 2019.
An improvement of 100000, we expect our bad debt to decline further upon the completion of the sale of a pull high facility.
Our balance sheet remains accompany strength and affords us the leverage to execute a number of initiatives to improve our business.
Operator, we're now ready to open up the call for questions.
Thank you Mike.
Ladies and gentlemen, if we have a question at this time. Please press Star then the number one key on your telephone keypad.
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To prevent any background noise, we ask that you. Please patient line on mute. Once your question has just stated.
Once again thats.
Star one for questions.
And our first question will come from the line of Eric Landry from BMO capital you may begin.
Good morning. Thanks.
Good morning line.
So.
The the Eyelock deal that you are currently in negotiations, but but can't see anything with this is did I hear that correctly. This is one deal.
Yes. This is one deal that.
It is essentially a multiyear deal.
In the healthcare space.
Yes.
Okay. So the number of facilities is it.
I mean.
As you know shot in the dark as tens or hundreds of thousands as far as facilities go.
Uh huh.
It it could be very substantial because we're still in negotiations with the company on the final numbers and everything else.
I'd like to pass on that and hopefully come back in the third quarter and we have a non disclosure. This time, we're working under a non disclosure at this point.
Got it okay. Thanks.
It is significant to our numbers.
Got you great, Okay, but I'd give it a shot.
The inventory.
The inventory issue with the next year and the X team.
Is it safe to assume that the sales would have sort of been at the normal run rate in the quarter had that not happened.
Couple of hundred dollars range or.
A little bit higher because of the fact that we have the IXYS were all new.
Okay. The Nx these were being upgraded a modified the latest software and the X C, which is the outdoor unit were all new those would have been our first shipments. So we are anticipating a higher run rate than last year on the on the hardware sales.
Okay.
And then on the vending machine you mentioned that it was a manufacturing issue I just want to make clear that there hasn't been any sort of adjustment on the number.
The initial forecast has is still intact as far as the eventual number of those things in the market.
Yes. This was a launch for them they wanted to make sure that.
It's it's a very expensive machine and they wanted to make sure that everything was right. So.
The launch was scheduled for the first quarter.
They didnt make it in.
But they are now shipping product and.
Not only are they they're quite bullish about the number of units that they are going to be able to build I think there is a hold back right now is ramping up to the numbers that they have.
Mhm.
I got you, Okay shifting gears here a little bit was there any T. Five through wireless revenue in the may quarter.
No.
Okay.
Im assuming that that is starting to ship this quarter, if it hasn't already.
Yes. It started this month, the us and were getting rave reviews on the true wireless.
Believe me I've read them.
Great.
That a product that we can assume is at the segment margin.
Yes, you can assume that yes.
Great.
And is that is that going to be on tmall.
Yes, those are some of the things that are planned for them.
Okay, Great I mean to me it looks like a fantastic product I'm really excited to see.
How you do it now this is sort of kind of a dumb question here, but is there any sort of.
IP protection on that case.
The.
No there isn't the only IP protection on the unit is the shape of the.
The year before.
Yes, right and you're not you're not nervous that theres going to be an issue and in China was that.
Well you know we fought comp toughest claims in counterfeit product over the years, it's a constant battle with Eclipse brand.
But.
You know, it's going to exist, we're going to monitor the situation and we were going to we will do our best to protect our position.
Okay.
Any cost by an additional just by the by the way the 2.1 million pickup that we had.
On the.
The expenses last year.
Were that was the award of legal fees on the counterfeit claim that include Chad against the counterfeiters. So we are very active and very protective.
The position of the liquids products.
Okay.
Real quick your any any comments on the initial sell in for that.
But your wireless.
Were out of stock.
Okay.
Lastly, the product recall in.
A was that a one timer or is that sort of an ongoing thing.
So we call on and others that will they will be handling that over the course of this next fiscal year.
So we can look forward to not a one yeah right, it's not a onetime effect for this quarter.
Okay. So we were going to look forward to lower earnings for a year now and that thing.
That would offset some of the increases but Asap has got some very positive things happening in other segments of their market that can offset it.
All right. Thank you.
Thank you.
And once again.
Once again, ladies and gentlemen that star one for questions Star one.
One moment for questions.
All right and we have a lot of Thomas came from came brothers you may begin.
Thomas Kahn Khn speaking.
Uh huh.
Good morning, Pat.
John This was a very I would say disappointing release.
You know life.
Listen to long time John .
Our clients own maybe 17% of the company's stock.
And if you listen to the released the calls for the past lets say.
Three years, there's always some optimistic.
You know statements in the call.
And for some reason the optimism John never comes through.
So the way we look at it is.
That's probably $7 a share of liquid assets.
And then some more in the way of net assets.
So the compensation package it regardless of what a paid consult says to you.
Kinda it doesn't make sense.
I mean, you have to hit $5 in the $7 of cation Asap liquid assets I mean, it's all wrong from my perspective, I mean, the way these things should be done John if they were in shareholder interest.
It would be like stretch options.
Very large options with a 10 15 20 dollar strike price.
To align the shareholder interest.
With.
You know with the management.
Now I remember that you said in a public meeting.
That our company stock was worth four or five times.
The $7 price it was selling for.
Now maybe you had a a bad mushroom for breakfast and your omelet.
So maybe it would that number's wrong, maybe its not worth 20, 835, maybe it's worth less but we all know that as grossly undervalued.
So the compensation plan irrespective of what.
Was said by phone.
Doesn't make any sense I'd like to see by the way a copy of the compensation plan. If you would please make a filing so all the shareholders could look at it because its way off base as far as far as I'm concerned.
Tom Tom Let me address that we will be putting out hey.
It's in the 10-Q compensation.
Okay plan with the name of the consultant.
Because I want to be sure not to use those guys again.
And I have to tell you that I can recommend to our clients that they vote for this management board whatever because of what I just said.
I cant recommended I mean, our stock is I agree.
I think when you read the agreement you realize that there our stretch goals. Okay. The amount of awards depend on US leaves me for example, getting to a $15 share price. So when you read the agreement I think you'll have a different.
A different look at it and we can hold that and you and I can discuss it when you hear for the shareholders meeting.
That's perfectly alright, Jon, but I will say that.
Anything with a five dollar price when I look at a at se and cash being worth seven right now today doing no work doing nothing.
John seems to me in EMEA giveaway.
And I like Pat Nice Guy I don't mind, you're giving away thanks to him.
But we're talking about shareholder value and shareholder assets and I don't believe its comparable regardless you can always get a consultant to say anything you want but I just think it's unconscionable, if theres $7 worth of assets and cash in here.
And Pat has a contingency $5.
What am I missing here.
Your Ms. So I hope John will be at the meeting lunch I'm sure it will be.
Sure he will.
Be able to talk about this with us.
I still enough our stock is so cheap.
I still I'm always very concerned about.
You know managers not buying shares when the windows open for their own account.
Because there's nothing better than.
At Sun or somebody Johnson or somebody else stepping up to the plate and putting 50 or 100 grand money into it or any of our other.
Other directors.
There is something wrong here and I can't tell you what.
Let me read the rebid contracts and then we'll have a discussion because you're missing a big portion of it so I will remain.
Absolutely anybody telling us anything to the contrary.
We are not going to vote with management, because we're not happy you can see the price of the stock for the past five years during one of the biggest bull markets and American history.
And you can listen to the the tapes every quarter.
John to see what Pat says and that pretty much optimistic sayings of one kind or another and thats something wrong, but we'll discuss an estimate.
Good.
Let's move on.
Thank you and our next question comes from the line of Brad Leonard.
From BMO capital management, you may begin.
Hi, guys and.
I have one question on the comp plan.
Those have not been filed yet right the point of actual plan.
The contracts.
Alright, so the detail in the Q, but I didn't see anything else there was no other.
Detailing that weather.
No, but it will be filed.
Okay.
Okay, well look for that.
And so here's my here's Mike I think you guys have done a lot of picking a lot of steps to try to.
Clean up the reporting structure.
Realized some asset value.
And try to get the value recognizing the stock I mean this is very.
Easy when I look at this I mean, you're going to have three bucks in net cash you've got a bunch of real estate that you. All you said that covers the stock price today, So let's say that's worth five.
Hey, assays worth 250 year three I mean, this is really easy to get to higher stock price and so the klipsch business is worth maybe not what you paid for it but it's got to be worth I don't know.
Four or $5 a share probably.
I would read into consumer language I think I would disagree I'd indicated the klipsch acquisition would probably sell for more than what we paid for it at this point, okay, well that's great.
I'll take your word you probably know better than me I'm trying to be conservative here, but that would be even better. If it's work that the rest of the CE is worth maybe nothing I don't know thats being conservative again, it might be worth something.
Autos worth a one to $2 a share in Eyelock is worth an unknown, that's kind of how I add back of the envelope and I say I'm not sure we're dialogues work.
Could be worth a lot could be worth nothing so my back of the envelope math with eclipse being worth less than you think it is is like 12, 50, 15 Bucks a share I'm thinking.
This is really exciting I mean, I should be stepping on this thing and so here's my biggest concern I mean, you've taken a lot of steps to realize some value and tried to clean this up.
Is if my math is anymore ballpark correct why it why are we not just dismantling the company.
And selling off the parts and returning cash to shareholders and everybody goes on their happy way.
Versus and here's the risk right for me is the unknown risks that.
You're going to take this pile of cash.
And your asset value are going to buy some acquisition or makes do something that doesn't work out and all the said, we're just burning stuff and it ends up being like 365 or potentially how eyelock eyelock is unknown hopefully, it's going to ramp and we're going to also great results from that.
But thats might risk and I know that John owns a ton of stock.
So he is got a lot of skin in the game here and but.
Let me help me to have comfort that we're not going to do something stupid that we're really going to do the best thing.
And try to realize the value of this company, whether that's dismantling and everybody goes home.
And we sell off the divisions or you're going to do something smart with your asset value or get the earnings up to a point where that then it looks like.
There's enough value there to create a stock price of 10 or 12 $14 per share.
I know that was a question, but I'd like to hear your thoughts, yes, we got it got it right you're absolutely correct in Europe Rose this a drone show them.
And you're correct in Europe , Brazil.
We will we'll know where all the points you have mentioned.
But before this mapping of the company, we really believe the potential for books was very substantial.
There is not reflected in the share value right, though proposal this book.
But if you were to try and sell the company roadmap based on these bulk valuations I don't think the shareholders would come up with anything of real value.
We do believe very strongly in the potential restructuring has been big numbers, but blends though for the different divisions possible acquisitions to round out our existing businesses should all make a substantial contribution to the future.
Revenue and earnings for this corporation, which will then be other really reflected in the price of the stock.
And I'm not sure that its do with the advantage of the shareholders to dismantle as you call it but road too so little bits and pieces at this time I think if we can materialize uploads low.
And with the cash that we have in the bank and we are debt free we have a potential to show a much better performance in much better group. So that's our plan.
Okay.
That's all I had appreciate it okay. Thanks, Brett Thank you Brad.
Thank you.
And our next question comes from the line of Thomas Kahn from Kahn Brothers.
As a follow up.
I don't believe that.
Anything is going to be sold because I can't prove it unless John would tell us.
That John stock has a very low basis, and probably would result in a.
Taxable event, so I think the best way to kind of realize these large values were talking about the share repurchase.
That's the best way because as John stock has a low basis why would we sell it now.
Doesn't make sense as a state can sell it with a stepped up a higher basis. I think you know so I think the best thing and I'm really distressed John to see that some of you at directors are not buying shares.
I mean, they take vacation say buy cars summer houses window houses whatever but I just don't want to sit on this board patient step up to the plate and put their money with them ounces.
We're well aware of the Tom a new route this point very clearly blue in the past.
I think we will see some James was picking bush.
And as we go along and differential in terms of my materializing value for much book.
A lot of tax problem, it's a problem of the low price of the stock right now I think it's worth a lot more as you do.
I'm in no hurry to dispose of measures are not sure everyone is felt most shows altogether.
It's something that I can decide as we go alone.
But right now it's not a problem, it's more of a valuation problem and getting wall Street to record lows.
Value that's in the stock of walks in and out so our cash holdings and that's what we're working on.
Yes, well, that's a good answer and I think that one of the things that would help our share price.
Would be people who are on the inside not Q.
<unk> directors and so forth when that permitted step up to the plate and buy shares they don't do it they're reluctant there is something wrong I don't understand it if the stock is worth 10 or 15 or 20.
Why aren't these direct are stepping up to the plate.
They have in the past.
And I think you'll see that they will continue in the future and as I indicated on.
On my comments earlier.
All of the the managements plans are based on having more stock the bonuses based on stock not cash, which will put more stock into the hands of management and align them more with the shareholders that was the intent of what we went out to do with the advisors and that's exactly what happened I think after you read the agreement.
You'll see that that was.
That was what was accomplished well or not.
We'll talk at the meeting John I think you've been getting.
That advice I Havent read this report yet, but the way I see the bad advice, John as I look over the past 16 quarters.
And I listened to the calls.
The shareholder calls I think you've been somehow getting bad advice, but we can talk further at the meeting.
Well a lot of our recommendations for beyond those have come from you Tom.
Well then you have been getting bad advice for me, but I will tell you.
I will tell you that if you look back over the past three or four years.
There have been problems and we can to offer.
Yes, they have been and we'll talk again, we assume that when we get together, we'll talk because again.
Your suggestions over the past to use the top flight first class investor.
Banks advisers comp advisers, we've used some of the best in the industry.
So from that standpoint.
I'm not concerned.
With that in your comments because the plans were thoroughly vetted and thoroughly laid out as no one's accusing you of doing anything improper or illegal or not I'm not accusing you of that don't don't even go there.
Im accusing management and the board of making poor judgment business judgments, which had been before.
Yes that when you would use the the board.
Of and management of making four acquisitions like in the case of Hirschmann, where we turned around and made $45 million and in the case of glitch where slippages.
We will I can certainly sell cliffs for more money than we paid for it okay and they are doing well. So some of the comments I understand you're upset with the stock price that's fine, but some of the other comments are not not terribly correct and I'm not upset so much with the price some ups with the.
Judgments and decisions of my fiduciary is my directors, that's one I'm upset with let's say, mostly don't have skin in the game and they've been making some good but some bad decisions and they don't seem to be motivated, but what I'm motivated by which as you know we own clients somewhat.
17% of the stock so I have to talk to them every day about the decisions you guys are making.
Yeah, I get it and hopefully the plans that we've laid out in the new changes that we've made and the divestitures and the realization of capital.
That we have here now in the company we have no we have no debt.
Were estimated to be sitting on north of 100.
North of $80 million in cash after we close the German acquisitions will allow us to do the things that we've talked about as far as buyback stock.
To help the share price potentially do a dividend, but also help build some of our EBITDA and leverage our existing overhead here in the states.
To generate better returns on any acquisitions that we do that's the basic game plan and that's what you'll see us do over the next over the next few quarters.
All right, ladies and gentlemen, thank you for participating in today's conference. This concludes the program Amy all disconnect everyone have a garden.
Thank you for your interest in Voxx I'm looking forward to implementing the plans outlined and hope to report improving numbers in the months ahead have a good day and enjoy the rest of the summer. Thank you.
I got output.