After delivering massive sales growth in Q3 2020, VOXX (VOXX) shareholders saw an increase of more than 57% in their share price. The company delivered quarterly net sales growth of 83% y/y along with Adjusted EBITDA improvement of $18.7 million. Congratulations if you saw these numbers coming:
Among the different commentaries given by the management, I would highlight the words of the CEO, Pat Lavelle. Notice that the company is performing well in every segment. The CEO noted that the VOXX expects to see one of the best years in the history of the business:
“We delivered a very strong third quarter with all segments reporting higher sales and improved bottom-line performance. Within Automotive, demand for our EVOLVE rear-seat entertainment system with Amazon’s Fire TV continues to grow, with new OEM programs starting in our Fiscal 2022 second quarter, and the VSM and DEI acquisitions are fully integrated and performing well. Within Consumer, our premium audio product sales continue to increase significantly, as we have expanded our retail distribution, added key brands and enhanced our product offering”.
Source: PrNewsWire
“We are on track for one of the best years in our Company’s history from a profitability perspective and believe this is the beginning of the next wave of growth”.
Source: PrNewsWire
Balance Sheet
With $21.3 million in cash, the balance sheet looks very solid. Cash decreased a bit as compared to that reported in February 2020. Note that VOXX had to pay a domestic credit facility and also reported working capital needs. In my view, the most positive is that the company expects to end fiscal 2021 with more cash than that in fiscal year 2020. Remember also that the amount of debt outstanding is not significant, which I like quite a bit. As of November 30, 2020, total debt was equal to $7.2 million.
Our Take
Net sales decreased from $757 million in 2015 to $395 million in 2020. In the most recent quarter, the company is showing momentum again. With this in mind, perhaps value investors may decide to acquire shares of the company. Take into account that there are not many reasons to be skeptical about the company’s turn around. These days, not many companies report quarterly sales growth of 83%.
Source: Market Screener
The current valuation of VOXX is approximately $350 million. In the nine months ended November 2020, the company reported EBITDA of $35 million. If we assume 2021 EBITDA of $60 million, VOXX trades at 5.8x EBITDA, which does not appear very expensive. Taking these factors into account, in my view, if new financial figures in 2021 are good, the share price will most likely increase.
Disclosure: I don’t own VOXX shares.
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