Two of the largest premium audio brands sold in Australia are in serious trouble, with one for sale and the other set to sell assets and brands in a desperate bid to stem losses and mounting debt.

Vox International, the owners of Premium Audio Company, and the former Sound United, now Masimo Consumer, are facing tough times. Together they own several major premium audio brands sold in Australia, notably receiver brands such as Marantz, Denon, Pioneer, Integra and Onkyo.

Late last week, Vox held an online AGM that lasted just 60 seconds. The board holding the important meeting owns a large portion of the company’s shares, so their decisions are subject to approval.

Voxx directors own 44.61% of all Class A shares and 96.6% of all Class B shares, which are held by founder John J. Shalam and his son Ari Shalam.

During the 60-second decision-making process, not a word was said about the 12.2% drop in revenue, or the 53% net loss, or the mounting debt and poor decision-making by senior management.

In the 60 seconds that followed, they elected seven board members, approved the company’s 2024 Equity Incentive Plan, and hired an independent registered public accounting firm to help them get out of trouble.

Let’s not forget that this was exactly the sales organisation that thought they could grow sales in Australia after dropping Qualifi as a distributor by forming Premium Audio Company, which also failed.

Directors claimed that there were an appropriate number of shares present at the meeting to represent a quorum “for the purpose of conducting business” and carrying forward their agenda.

The number of shareholders in the company has fallen by more than 68% in the past six months.

Ari Shalam, co-vice chairman of Voxx’s board of directors, parroted earlier speeches by CEO Pat Lavelle and then read from a script that some observers say could easily have been written by Lavelle. It revealed that the company is facing severe global economic headwinds, OEM production delays, inflation, rising interest rates and a retail environment that limits the range of Vox International brands, including Klipsch speakers.

Despite previous attempts to spread “optimism” in previous financial briefings, the company had no choice but to admit it faced “economic hurdles” through 2025, with executives left with no option but to sell assets to reduce debt.

There were no apologies, and no honest admissions of poor judgment, such as investing in the production of Integra, Pioneer and Onkyo receivers when the market was telling executives they were taking a huge risk.

In 2024, gross margins declined by 80 basis points.

Now the company claims that “additional restructuring” will take place in fiscal 2025, aimed at boosting operations in higher-margin, higher-stability product categories, further reducing overhead costs and divesting non-core products.

The aim is apparently to free up money and ‘management bandwidth’ to reinvest in the company.

As we previously reported, the company has hired an outside Accordion to analyze its operations, which some say could lead to the company being sold.

The company has admitted that its $60 million debt load is too high and that the interest on the money is hurting the company, which also has a joint venture with Sharp to produce receivers.

Due to an unfavorable court ruling and additional mortgage costs in the lawsuit against Sea Guard, Vox International increased its debt by $42 million.

To address the dire situation, the company is also selling the real estate it currently owns.

In a preview of what’s to come, Shalam claimed it is now in “advanced discussions” to sell a non-core brand to a competitor, with the deal expected to close in the third quarter.

He claims the deal will generate multi-million dollar proceeds, further strengthening our balance sheet.

Shalam admits that selling brands will result in lower sales, but “they should also improve operational performance.”

For now, Vox International’s focus is clear: reducing debt and resizing the company for future growth.

What the market thought of their ideas was that Vox International hit a new 52-week low of US$2.43 per share.

At the beginning of this year, VOXX stock was trading at US$10.85 per share.

Investors have seen their investments fall by 77½% this year.

As one observer claimed, is this what “shrinking to greatness” means?

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