Voxx On Schedule for WiSA Product Shipments, but Negotiations Could Hamper Action Cam Delivery
Klipsch is on track to deliver its long-awaited WiSA (Wireless Speaker and Audio) 5.1- and 7.2-channel home theater systems in Q3, said Pat Lavelle, CEO of parent Voxx, on the company’s Q1 FY 2016 earnings call Friday. Tony Ostrom, Klipsch Group vice president-product development, told us at CES (see 1501160040) that the time was right for Klipsch to launch WiSA due to consumers’ desire for a simpler home theater system setup. Ostrom said in January the suggested retail price of the 5.1-channel system would be $5,000-$6,000. Klipsch will also launch a Bluetooth soundbar this quarter, Lavelle said Friday
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The Voxx 360fly action camera, promised at CES for spring delivery, is scheduled to ship in August through a “large, U.S.-based retailer” after several launch delays, said Lavelle. But he said partner 360fly recently went through a senior management change, and that launch plans could be derailed because Voxx is renegotiating the initial distribution agreement with 360fly. “If we cannot come to terms, then neither company will be able to launch this product until this is resolved,” said Lavelle. Voxx expects a resolution "shortly" and the product to deliver as planned, he said. Gaining 360fly shareholders' approval on the revised distribution terms “could slow it down,” but Lavelle said he believed both parties would “get it done.”
“We are confident the 360 has resolved most, if not all, the prior technical issues,” Lavelle said, and Voxx is ready to launch next month on its end. Voxx will handle the launch and distribution, and the launch will be supported by an “aggressive national campaign,” said Lavelle. As production ramps up, Voxx will add customers, he said. The company began with an exclusive distribution launch so it could handle all sales that came in, said Lavelle. The initial production ramp “shouldn’t last longer than a couple of months” and availability won't be a problem heading into the holidays, he said.
In an update on Voxx’s EyeLock authentication technology, Lavelle said that “we’re convinced that biometrics will be how we are identified and authenticated in the future.” EyeLock has received interest from financial firms, government agencies, carmakers, security manufacturers and chip developers, he said. The company plans to begin shipments of the enterprise myris system this quarter and the EyeLock perimeter access systems in its fiscal Q3.
Voxx net sales for Q1 FY 2016 dropped by $22.5 million led by a $10 million falloff in automotive sales to $90 million, the company said. Aftermarket automotive sales drove the decline of $1.9 million in revenue, when factoring in the impact of euro conversion, it said, while the OEM aftermarket business grew despite the impact of the euro. Overall, the euro accounted for roughly $14 million of the decline, said Lavelle.
Mexico accounted for about $5 million in lower revenue due to a change in distribution strategy, and the remainder was due to lingering effects from the West Coast port slowdown across most product lines, Lavelle said.
In its OEM automotive business, Voxx’s contract with Jaguar Land Rover begins this month for a new product category: a multidigital tuner module that Lavelle predicted would generate $58 million over the three-year term of the contract. A five-year contract for a multidigital tuner with Daimler, beginning December, is expected to generate $110 million-$180 million, he said. Contracts for 4G antennas are expected to generate $40 million, he said, and Voxx is in discussions with Volkswagen to expand the 4G program to other VW models, he said.
Voxx’s contract announced last week with Cadillac for speakers and Klipsch headphones should generate new business totaling $20 million annually, said Lavelle. The OEM group also added GM to its rear-seat entertainment program, and that should bring in $20 million annually beginning in model year 2018, he said. Effective Aug. 1, Voxx will begin licensing its Jensen-branded aftermarket car audio products to Dual Electronics, a strategy that will enable the company to "transition resources," he said. Revenue potential is $12 million to $14 million annually from the licensing deal, he said.
In Premium Audio, sales were down nearly $6 million to $29.3 million, but margins were up, said Lavelle. Consumer accessories sales slipped from $49.1 million to $44.7 million.
Among the featured fall products are Bluetooth indoor and outdoor speakers and new reception products, said Lavelle. Highlight areas include two new antennas launching as part of Best Buy’s “Cut the Cord” displays, four new remote controls in the Best Buy mix and the Hatteras Bluetooth outdoor speaker that will sell at Best Buy and Dillard's, said Lavelle. Walmart will carry a redesigned Terk antenna in 3,500 stores this fall, and Walmart is also expanding its assortment of Voxx 808 headphones, he said.