VOXX International Corporation, the parent company of brands including Onkyo, Pioneer and Klipsch has released delayed Q3 financial statements for the period ending November 30, 2024. Voxx had reported to the SEC, the governing body that monitors publicly traded companies, that the company would be late filing Q3 statements with the “delay primarily related to the Company’s entry into an agreement to merge with Gentex Corporation causing VOXX to pause filing, as the company tested its goodwill, tangible assets, and long-lived assets for impairment, thereby delaying its ability to timely file.” Gentex has previously announced the acquisition of VOXX at a price of $7.50 per share, where the shares continue to roughly trade today.
The latest results have since been filed after such goodwill due diligence showing VOXX has taken significant charges to assets on the company’s balance sheet with a meaningful write-down of almost half to the value of its goodwill and to the company’s intangible assets that would include brand value. What this means is that the brands in the VOXX portfolio are at least on the books, showing a drastic decrease in value.
In the filing VOXX reported a 22% decrease in total net sales in the same quarter in the previous year at $105.2 million compared to $135.3 million for Q3 2023. Net sales for the first three quarters from this reporting year are down 19.8% to $289.3 million meaning YTD sales have declined by $71.5 million. VOXX reported all three business units, Automotive, Biometrics and Consumer reporting declines. Such a delay in reporting financials could indeed have ramifications to the sale of VOXX to Gentex who will now be reassessing VOXX’s valuation which is further hindered by VOXX recently losing their largest U.S. customer the ProSource Buying Group.
In the latest filing VOXX states “the Company today announced that the waiting period with respect to the proposed merger transaction with Gentex under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), expired at 11:59 p.m. Eastern Time on February 3, 2025. Additionally, on January 27, 2025, a letter was received from the German Federal Cartel Office advising that the proposed merger does not meet the prohibition conditions under the German Competition Act, and the merger may be implemented. The expiration of the HSR Act waiting period and clearance under the German Competition Act satisfy certain conditions to the closing of the merger. The proposed merger remains subject to other customary closing conditions, including approval by the Company’s stockholders and the absence of any legal prohibitions against the merger by a governmental authority of competent jurisdiction.” This statement included in the filing may be to remind readers that the merger agreement is lock-tight and the shortfall in Q3 will have no bearing on the sale to Gentex. Gentex is also close to five times the size of VOXX with $2.3 billion in sales compared to VOXX at $469 million in Fiscal 2024. We will have to wait and see how this concludes.