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VOXX International Corporation Reports Its Fiscal 2021 Fourth Quarter And Year-End Financial Results
[May 13, 2021]

VOXX International Corporation Reports Its Fiscal 2021 Fourth Quarter And Year-End Financial Results


ORLANDO, Fla., May 13, 2021 /PRNewswire/ -- VOXX International Corporation (NASDAQ: VOXX), a leading manufacturer and distributor of automotive and consumer technologies for the global markets, today announced its financial results for its Fiscal 2021 fourth quarter and year ended February 28, 2021.

Commenting on the Company's Fiscal 2021 results, Pat Lavelle, President and Chief Executive Officer stated, "As our results demonstrate, we made significant progress this past fiscal year and believe we are at the beginning of the next phase of growth. We made two strategic acquisitions to strengthen our automotive business and have been awarded over $400 million in new OEM awards, many of which are the result of our alliance with Amazon to bring Fire TV to the automotive markets, and other OEM awards from our acquisition of VSM. We also realigned our premium audio business, gained new retail customers and with the formation of 11 Trading Company, expanded our distribution and brand offering. Demand for EyeLock's iris authentication solutions has picked up, and we entered into a strategic process to seek partners that could help expedite EyeLock's growth and expand into new markets. As announced this month, this process resulted in a new distribution agreement with GalvanEyes Partners, LLC which upon shareholder approval, should substantially reduce our cash burn and EyeLock's EBITDA loss."

Lavelle continued, "Looking ahead and barring any major downturns in the economy or changes that could impact our customer base, we are poised for growth in Fiscal 2022 and anticipate strong bottom-line performance. In the years that follow, we believe we are in an excellent position to continue this trend due to the volume of automotive awards received and others we expect will materialize. Our premium audio offering and expanded distribution should result in new opportunities and our Biometrics segment should show improvements given awards, projects currently in the testing phase, and through our new strategic alliance with GalvanEyes Partners. Lastly, our cash position and balance sheet are strong, we have access to capital, and we continue to look for strategic transactions that can drive profitability further while enhancing shareholder value."

Fiscal 2021 and Fiscal 2020 Fourth Quarter Comparisons
Net sales in the Fiscal 2021 fourth quarter ended February 28, 2021 were $162.5 million as compared to net sales of $101.1 million in the Fiscal 2020 fourth quarter ended February 29, 2020, an increase of $61.4 million or 60.8%. The Company reported year-over-year increases in all reporting segments for the comparable Fiscal periods.

  • Automotive Electronics segment net sales of $52.5 million as compared to $27.7 million, an increase of $24.8 million or 89.7%.
  • Consumer Electronics segment net sales of $109.7 million as compared to $73.1 million, an increase of $36.6 million or 50.1%.
  • Biometrics segment net sales of approximately $0.1 million in both, fiscal fourth quarter periods.

The gross margin in the Fiscal 2021 fourth quarter was 26.1% as compared to 28.2% in the Fiscal 2020 fourth quarter, a decline of 210 basis points. While gross margin declined year-over-year and was primarily driven by lower gross margin within the Consumer Electronics segment, consolidated gross profit increased by $13.8 million or 48.5%.

  • Automotive Electronics segment gross margin of 26.2% as compared to 17.7%, up 850 basis points.
  • Consumer Electronics segment gross margin of 26.2% as compared to 32.2%, down 600 basis points.
  • Biometrics segment gross margins were negative for both of the comparable periods.

Total operating expenses in the Fiscal 2021 fourth quarter were $38.5 million as compared to $63.5 million in the comparable Fiscal 2020 period, a decline of $25.1 million or 39.4%. The Fiscal 2021 fourth quarter includes intangible asset impairment charges of $1.3 million whereas the Fiscal 2020 fourth quarter includes intangible asset impairment charges of $30.2 million. Excluding these charges, total operating expenses for the comparable fiscal fourth quarter periods increased by approximately $3.9 million. However, the Fiscal 2021 fourth quarter included $4.6 million of operating expenses related to the newly formed VSM and DEI subsidiaries, established in connection with the Company's acquisitions in the fourth quarter of Fiscal 2020 and the second quarter of Fiscal 2021, respectively, whereas the Fiscal 2020 fourth quarter included $0.6 million of similar expenses.

The Company reported operating income in the Fiscal 2021 fourth quarter of $3.9 million as compared to an operating loss of $35.0 million in the comparable year-ago period, an increase of $38.9 million.

Total other expenses for the Fiscal 2021 and Fiscal 2020 fourth quarter periods were $2.1 million and $1.0 million, respectively. The key driver for the year-over-year improvement was a $1.3 million increase in equity in income of equity investee which relates to the Company's 50% non-controlling interest in ASA Electronics, LLC ("ASA").

Net income attributable to VOXX International Corporation in the Fiscal 2021 fourth quarter was $9.4 million as compared to a net loss attributable to VOXX International Corporation of $21.8 million in the comparable Fiscal 2020 period, a year-over-year improvement of $31.2 million. On a per share basis, in the Fiscal 2021 fourth quarter the Company reported basic and diluted net income per share attributable to VOXX International Corporation of $0.39 and $0.38, respectively. This compares to a basic and diluted net loss per common share attributable to VOXX International Corporation of $0.90 in the comparable period in Fiscal 2020.

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") in the Fiscal 2021 fourth quarter was $10.3 million as compared to an EBITDA loss in the Fiscal 2020 fourth quarter of $18.4 million, a year-over-year increase of $28.7 million. Adjusted EBITDA in the Fiscal 2021 fourth quarter was $11.9 million as compared to Adjusted EBITDA in the Fiscal 2020 fourth quarter of $1.6 million, a year-over-year increase of $10.2 million.

Fiscal 2021 and Fiscal 2020 Year-End Comparisons
Net sales in the Fiscal 2021 year ended February 28, 2021 were $563.6 million, an increase of $168.7 million or 42.7% as compared to $394.9 million in the Fiscal 2020 year ended February 29, 2020. All of the Company's business segments reported year-over-year growth.

  • Automotive Electronics net sales in Fiscal 2021 were $163.9 million as compared to $114.2 million in Fiscal 2020, an increase of $49.7 million or 43.6%. The year-over-year growth was primarily driven by higher sales related to the Company's VSM and DEI subsidiaries. The Company also had a year-over-year increase in sales of aftermarket security and remote start products. Offsetting this growth, was the adverse impact caused by COVID-19 which resulted in several of the Company's OEM customers shutting down their plants as well as various retail and aftermarket store closures.
  • Consumer Electronics net sales in Fiscal 2021 were $398.3 million as compared to $279.7 million in Fiscal 2020, an increase of $118.6 million or 42.4%. The year-over-year growth was primarily related to higher sales of premium audio products, particularly in the premium home theater, subwoofer, and premium wireless categories, all of which achieved market share growth. Additionally, new distribution agreements through the Company's newly formed subsidiary, 11 Trading Company LLC ("11TC") positively contributed to the year-over-year increase in net sales, as did higher sales in Europe.
  • Biometrics net sales in Fiscal 2021 were $0.8 million as compared to $0.5 million in Fiscal 2020, an increase of $0.4 million or 81.3%. Driving the year-over-year growth were higher sales of the Company's EXT outdoor perimeter access and Nano NXT perimeter access products. Additionally, in Fiscal 2021, the Company began selling its NIXT product which can be optionally fitted with iTEMP, a product that can take an individual's temperature before allowing iris access.

Gross margin in Fiscal 2021 was 28.1% as compared to gross margin of 27.8% in Fiscal 2020, a year-over-year increase of 30 basis points. The Company's Automotive Electronics segment reported gross margin in Fiscal 2021 of 24.0% as compared to 20.3% in Fiscal 2020, an increase of 370 basis points, primarily driven by higher sales of OEM and aftermarket products related to the VSM and DEI subsidiaries, and higher sales of higher margin aftermarket remote start and security products. The Consumer Electronics segment reported gross margin in Fiscal 2021 of 29.8% as compared to 31.0% in Fiscal 2020, a decline of 120 basis points. While gross margin declined year-over-year, gross profit in this segment increased by $32.3 million driven by new premium audio product lines brought to market as well as sales from the Company's new distribution subsidiary, 11TC. Biometrics segment margins were negative for both of the comparable fiscal year periods.

Total operating expenses in Fiscal 2021 were $136.1 million as compared to $160.1 million in Fiscal 2020, representing a year-over-year decline of $24.0 million or 15.0%. Selling expenses increased by $4.5 million; general and administrative expenses increased by $1.2 million; and engineering and technical support expenses declined by $0.7 million. Note, Fiscal 2021 includes approximately $13.6 million of higher expenses related to the VSM and DEI subsidiaries. Additionally, Fiscal 2021 includes intangible asset impairment charges of $1.3 million whereas Fiscal 2020 includes intangible asset impairment charges of $30.2 million.

The Company reported operating income in Fiscal 2021 of $22.5 million as compared to an operating loss of $50.3 million, a year-over-year improvement of $72.8 million.

Total other income in Fiscal 2021 was $5.2 million as compared to total other income of $9.4 million in Fiscal 2020. The year-over-year decline was primarily related to a gain on sale of real property of $4.1 million in Fiscal 2020, partially offset by a $2.2 million increase in equity in income of equity investee related to ASA. The remaining difference was primarily due to foreign currency.

Net income attributable to VOXX International Corporation in Fiscal 2021 was $26.8 million as compared to a net loss attributable to VOXX International Corporation of $26.4 million in Fiscal 2020, a year-over-year improvement of $53.2 million. On a per share basis, in Fiscal 2021 the Company reported basic and diluted net income per share attributable to VOXX International Corporation of $1.11 and $1.09, respectively. This compares to a basic and diluted net loss per common share attributable to VOXX International Corporation of $1.08 in Fiscal 2020.

EBITDA in Fiscal 2021 was $44.4 million as compared to an EBITDA loss in Fiscal 2020 of $11.9 million, a year-over-year improvement of $56.3 million. Adjusted EBITDA in Fiscal 2021 was $46.9 million as compared to Adjusted EBITDA in Fiscal 2020 of $4.9 million, a year-over-year improvement of $42.1 million.

Balance Sheet Update
As of February 28, 2021, the Company had cash and cash equivalents of $59.4 million as compared to $37.4 million as of February 29, 2020, a year-over-year increase of $22.0 million. This increase includes the impact of $11.0 million paid for the acquisition of the aftermarket vehicle remote start and security systems and connected car solutions businesses from Directed LLC and Directed Electronics Canada Inc. ("DEI"). Total debt as of February 28, 2021 was $7.1 million as compared to total debt of $8.2 million as of February 29, 2020. The only debt outstanding as of February 28, 2021 related to the Company's domestic mortgage in Florida. Total long-term debt as of February 28, 2021 was $6.0 million as compared to total long-term debt of $6.1 million as of February 29, 2020.

Conference Call Information
VOXX International Corporation will be hosting its conference call and webcast today, May 13, 2021 at 5:00 p.m. Eastern. Interested parties can participate by visiting www.voxxintl.com and clicking on the webcast in the Investor Relations section or via teleconference using the information below.

  • Toll-free number: 877-303-9079 / International number: 970-315-0461 / Conference ID: 8489189

For those unable to participate, a webcast and teleconference replay will be available approximately one hour after the completion of the call.

Replay Information

  • Replay number: 855-859-2056 / International replay number: 404-537-3406 / Conference ID: 8489189

Non-GAAP Measures
EBITDA and Adjusted EBITDA are not financial measures recognized by GAAP. EBITDA represents net income (loss), computed in accordance with GAAP, before interest expense and bank charges, taxes, and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted for stock-based compensation expense, life insurance proceeds, certain settlements, gains and losses, impairment charges, restructuring charges, and environmental remediation charges. Depreciation, amortization, stock-based compensation, and impairment charges are non-cash items.

We present EBITDA and Adjusted EBITDA in our Form 10-K because we consider them to be useful and appropriate supplemental measures of our performance. Adjusted EBITDA helps us to evaluate our performance without the effects of certain GAAP calculations that may not have a direct cash impact on our current operating performance. In addition, the exclusion of certain costs or gains relating to certain events that occurred during the periods presented allows for a more meaningful comparison of our results from period-to-period. These non-GAAP measures, as we define them, are not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies. EBITDA and Adjusted EBITDA should not be assessed in isolation from, are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP.

About VOXX International Corporation
VOXX International Corporation (NASDAQ: VOXX) has grown into a leader in Automotive Electronics and Consumer Electronics, with emerging Biometrics technology to capitalize on the increased need for advanced security. Over the past several decades, with a portfolio of approximately 35 trusted brands, VOXX has built market-leading positions in in-vehicle entertainment, automotive security, reception products, a number of premium audio market segments, and more. VOXX is a global company, with an extensive distribution network that includes power retailers, mass merchandisers, 12-volt specialists and many of the world's leading automotive manufacturers. For additional information, please visit our website at www.voxxintl.com.

Safe Harbor Statement
Except for historical information contained herein, statements made in this release constitute forward-looking statements and thus may involve certain risks and uncertainties. All forward-looking statements made in this release are based on currently available information and the Company assumes no responsibility to update any such forward-looking statements. The following factors, among others, may cause actual results to differ materially from the results suggested in the forward-looking statements. The factors include, but are not limited to the: risk factors described in the Company's annual report on Form 10-K for the fiscal year ended February 28, 2021 and other filings made by the Company from time to time with the SEC. The factors described in such SEC filings include, without limitation: the impact of the COVID-19 outbreak on the Company's results of operations, the Company's ability to realize the anticipated results of its business realignment; cybersecurity risks; risks that may result from changes in the Company's business operations; our ability to keep pace with technological advances; significant competition in the automotive electronics, consumer electronics and biometrics businesses; our relationships with key suppliers and customers; quality and consumer acceptance of newly introduced products; market volatility; non-availability of product; excess inventory; price and product competition; new product introductions; foreign currency fluctuations; and restrictive debt covenants. Many of the foregoing risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. The Company assumes no obligation and does not intend to update these forward-looking statements.

Investor Relations Contact:
Glenn Wiener, GW Communications (for VOXX)
Email: gwiener@GWCco.com

--  Tables to Follow  --

 





VOXX International Corporation and Subsidiaries

Consolidated Balance Sheets

February 28, 2021 and February 29, 2020

(In thousands, except share data)










February 28,

2021



February 29,

2020


Assets









Current assets:









Cash and cash equivalents


$

59,404



$

37,425


Accounts receivable, net



106,165




69,714


Inventory, net



130,793




99,110


Receivables from vendors



277




230


Prepaid expenses and other current assets



22,266




10,885


Income tax receivable



434




456


Total current assets



319,339




217,820


Investment securities



1,777




2,282


Equity investments



23,267




21,924


Property, plant and equipment, net



52,026




51,424


Operating lease, right of use asset



4,572




3,143


Goodwill



58,311




55,000


Intangible assets, net



90,104




88,288


Deferred income tax assets



99




52


Other assets



1,323




1,638


Total assets


$

550,818



$

441,571


Liabilities and Stockholders' Equity









Current liabilities:









Accounts payable


$

61,826



$

22,096


Accrued expenses and other current liabilities



53,392




34,046


Income taxes payable



1,587




1,523


Accrued sales incentives



25,313




12,250


Contract liabilities, current



4,178





Current portion of long-term debt



500




1,107


Total current liabilities



146,796




71,022


Long-term debt, net of debt issuance costs



5,962




6,099


Finance lease liabilities, less current portion



302




720


Operating lease liabilities, less current portion



3,582




2,391


Deferred compensation



1,777




2,282


Deferred income tax liabilities



6,645




3,828


Other tax liabilities



1,170




1,225


Other long-term liabilities



5,255




3,294


Total liabilities



171,489




90,861


Commitments and contingencies









Redeemable equity



3,260




2,481


Stockholders' equity:









Preferred stock:









No shares issued or outstanding







Common stock:









Class A, $.01 par value; 60,000,000 shares authorized, 24,416,194 and 24,306,194 shares issued and 21,666,976 and 21,556,976 shares outstanding at February 28, 2021 and February 29, 2020, respectively



245




244


Class B Convertible, $.01 par value, 10,000,000 shares authorized, 2,260,954 shares issued and outstanding



22




22


Paid-in capital



300,402




299,228


Retained earnings



148,906




122,139


Accumulated other comprehensive loss



(14,977)




(19,055)


Less: Treasury stock, at cost, 2,749,218 shares of Class A Common Stock at both February 28, 2021 and February 29, 2020



(23,918)




(23,918)


Less: Redeemable equity



(3,260)




(2,481)


Total VOXX International Corporation stockholders' equity



407,420




376,179


Non-controlling interest



(31,351)




(27,950)


Total stockholders' equity



376,069




348,229


Total liabilities and stockholders' equity


$

550,818



$

441,571



 

VOXX International Corporation and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income (Loss)

Years Ended February 28, 2021, February 29, 2020 and February 28, 2019

(In thousands, except share and per share data)













Year Ended



Year Ended



Year Ended




February 28,

2021



February 29,

2020



February 28,

2019


Net sales


$

563,605



$

394,889



$

446,816


Cost of sales



405,058




285,113




325,399


Gross profit



158,547




109,776




121,417















Operating expenses:













Selling



43,786




39,319




41,731


General and administrative



70,085




68,928




66,935


Engineering and technical support



20,897




21,602




24,387


Intangible asset impairment charges



1,300




30,230




25,789


Restructuring expense









4,588


Total operating expenses



136,068




160,079




163,430


Operating income (loss)



22,479




(50,303)




(42,013)


Other (expense) income:













Interest and bank charges



(2,979)




(2,975)




(3,788)


Equity in income of equity investee



7,350




5,174




6,618


Gain on sale of real property






4,057





Impairment of Venezuela investment properties









(3,473)


Impairment of notes receivable









(16,509)


Investment gain (loss)



42




775




(530)


Other, net



746




2,332




732


Total other income (expense), net



5,159




9,363




(16,950)















Income (loss) before income taxes



27,638




(40,940)




(58,963)


Income tax expense (benefit)



4,272




882




(6,131)


Net income (loss)


$

23,366



$

(41,822)



$

(52,832)


Less: net loss attributable to non-controlling interest



(3,401)




(15,379)




(6,741)


Net income (loss) attributable to VOXX International Corporation


$

26,767



$

(26,443)



$

(46,091)















Other comprehensive income (loss):













Foreign currency translation adjustments



4,365




(1,517)




(3,195)


Derivatives designated for hedging, net of tax



(305)




(505)




461


Pension plan adjustments, net of tax



18




(89)




(12)


Unrealized holding gain on available-for-sale investment securities arising during the period, net of tax



-




-




24


Other comprehensive income (loss), net of tax



4,078




(2,111)




(2,722)


Comprehensive income (loss) attributable to VOXX International Corporation


$

30,845



$

(28,554)



$

(48,813)















Net income (loss) per common share attributable to VOXX International Corporation - basic


$

1.11



$

(1.08)



$

(1.89)















Net income (loss) per common share attributable to VOXX International Corporation - diluted


$

1.09



$

(1.08)



$

(1.89)















Weighted-average common shares outstanding (basic)



24,201,221




24,394,663




24,355,791


Weighted-average common shares outstanding (diluted)



24,650,106




24,394,663




24,355,791


 

VOXX International Corporation and Subsidiaries

Consolidated Statements of Operations and Comprehensive (Loss) Income

Three Months Ended February 28, 2021, February 29, 2020 and February 28, 2019

(In thousands, except share and per share data)








Three Months Ended


Three Months Ended


Three Months Ended


February 28, 2021


February 29, 2020


February 28, 2019

Net sales

$

162,521



$

101,077



$

107,457


Cost of sales

120,153



72,543



83,703


Gross profit

42,368



28,534



23,754








Operating expenses:






Selling

12,810



10,574



10,465


General and administrative

18,417



17,032



17,303


Engineering and technical support

5,955



5,701



6,038


Intangible asset impairment charges

1,300



30,230



15,975


Restructuring expense

-



-



4,588


Total operating expenses

38,482



63,537



54,369


Operating income (loss)

3,886



(35,003)



(30,615)


Other (expense) income:






Interest and bank charges

(699)



(782)



(890)


Equity in income of equity investee

2,844



1,502



1,472


Impairment of notes receivable

-



-



(16,509)


Investment loss

-



-



(530)


Other, net

(7)



322



(553)


Total other income (expense), net

2,138



1,042



(17,010)








Income (loss) from before income taxes

6,024



(33,961)



(47,625)


Income tax benefit

(2,452)



(308)



(9,278)


Net income (loss)

$

8,476



$

(33,653)



$

(38,347)








Less: net loss attributable to non-controlling interest

(972)



(11,858)



(1,787)


Net income (loss) attributable to VOXX International Corporation

$

9,448



$

(21,795)



$

(36,560)








Other comprehensive income (loss):






Foreign currency translation adjustments

757



(196)



138


Derivatives designated for hedging, net of tax

209



(234)



(81)


Pension Plan adjustments, net of tax

103



(114)



(69)


Other comprehensive income (loss), net of tax

1,069



(544)



(12)


Comprehensive income (loss) attributable to VOXX International Corporation

$

10,517



$

(22,339)



$

(36,572)








Net income (loss) per common share attributable to VOXX International Corporation - basic

$

0.39



$

(0.90)



$

(1.50)


Net income (loss) per common share attributable to VOXX International Corporation - diluted

$

0.38



$

(0.90)



$

(1.50)


Weighted-average common shares outstanding (basic)

24,206,248



24,141,506



24,355,791


Weighted-average common shares outstanding (diluted)

24,993,408



24,141,506



24,355,791


 

Reconciliation of GAAP Net Income Attributable to VOXX International Corporation to EBITDA and Adjusted EBITDA













Fiscal



Fiscal



Fiscal




2021



2020



2019


Net income (loss) attributable to VOXX International Corporation


$

26,767



$

(26,443)



$

(46,091)


Adjustments:













Interest expense and bank charges (1)



2,404




2,476




2,223


Depreciation and amortization (1)



10,907




11,175




11,112


Income tax expense (benefit)



4,272




882




(6,131)


EBITDA



44,350




(11,910)




(38,887)


Adjustments:













Stock-based compensation



1,749




2,282




551


Life insurance proceeds



(420)




(1,000)





Gain on sale of real property






(4,057)





Settlement of Hirschmann working capital






804





Impairment of investment properties in Venezuela









3,473


Impairment of notes receivable









16,509


Investment (gain) loss



(42)




(775)




530


Environmental remediation charges









454


Restructuring charges









4,588


Intangible asset impairment charges (1)



1,300




19,543




25,789


Adjusted EBITDA


$

46,937



$

4,887



$

13,007




(1)

For purposes of calculating Adjusted EBITDA for the Company, interest expense, bank charges, depreciation and amortization, and intangible asset impairment charges added back to net income (loss) have been adjusted in order to exclude the minority interest portion of these expenses attributable to EyeLock LLC.

 

Reconciliation of GAAP Net Income Attributable to VOXX International Corporation to EBITDA, Adjusted EBITDA and Diluted Adjusted EBITDA per Common Share










Three Months Ended


Three Months Ended


Three Months Ended



February 28, 2021


February 29, 2020


February 28, 2019

Net income (loss) attributable to VOXX International Corporation


$

9,448



$

(21,795)



$

(36,560)


Adjustments:







Interest expense and bank charges (1)


497



649



464


Depreciation and amortization (1)


2,779



3,074



3,226


Income tax benefit


(2,452)



(308)



(9,278)


EBITDA


10,272



(18,380)



(42,148)


Adjustments:







     Stock-based compensation


295



466



158


     Impairment of notes receivable


-



-



16,509


     Investment loss


-



-



530


     Environmental remediation charges


-



-



454


     Restructuring charges


-



-



4,588


     Intangible asset impairment charges (1)


1,300



19,543



15,975


Adjusted EBITDA


$

11,867



$

1,629



$

(3,934)




(1)

For purposes of calculating Adjusted EBITDA for the Company, interest expense, bank charges, depreciation and amortization expense, and intangible asset impairment charges added back to net income (loss) have been adjusted in order to exclude the minority interest portion of these expenses attributable to EyeLock LLC.

 

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SOURCE VOXX International Corporation


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