Audiovox Corporation announced results for its fiscal 2011 second quarter ended August 31, 2010.
Audiovox trades on the NASDAQ under the symbol VOXX.
For more information visit: www.audiovox.com
Unedited press release follows:
Audiovox Corporation Reports Fiscal 2011 Second Quarter and Six Month Results
HAUPPAUGE, N.Y., Oct. 12 — Audiovox Corporation (Nasdaq: VOXX), today announced results for its fiscal 2011 second quarter ended August 31, 2010.
Commenting on the Company’s performance, Pat Lavelle, President and CEO stated, “We posted modest improvements in our top-line this quarter, driven by our acquisitions, new OEM programs and aftermarket automotive sales, as well as continued growth in our international operations. The consumer market in the U.S. however, continues to suffer as consumer spending for non-essential items remains low. Looking ahead, we are encouraged with recent reports pointing to continued increases in car sales as that will have a positive impact on both our top-line and our margins. We continue to introduce new products across all segments of our business and are exploring new categories where we believe Audiovox and our portfolio of brands can prosper. We remain on track for top-line growth and profitability in fiscal 2011, despite continued weakness in the global economies.”
Fiscal Second Quarter Highlights
* Sales up 3.5%, driven by continued improvements in the automotive market.
* Gross margins increase 240 basis points due to new product introductions and shift in business mix.
* OEM programs with Ford (Expedition), Lincoln (Navigator), Porsche (Cayenne), and BMW (X3).
* New GM promotion for rear-seat entertainment systems.
* Expanded remote start program under Prestige, Code Alarm and Omega brands.
* Launched One-for-All Smart Remote to go after high-end remote category; Zentral remotes to be launched in fiscal 2011 fourth quarter.
* Entered final testing stage for AirPower under the RCA brand; scheduled to launch in early 2011.
Fiscal Second Quarter Comparisons
Net sales for the second quarter ended August 31, 2010 were $129.3 million, an increase of 3.5% compared to net sales of $124.9 million reported in the comparable year ago period.
Electronics sales were $95.2 million for the 2011 fiscal second quarter as compared to $79.0 million for the three months ended August 31, 2009, an increase of 20.5%. Electronics sales were positively impacted by the acquisition of Invision Automotive Systems, new OEM programs and higher aftermarket sales of audio, video and security products for the mobile market. Certain consumer electronics product lines were up for the quarter, including digital camcorders and digital players, though these gains were partially offset by declines in other electronics categories driven by the continued weakness in overall consumer spending. Electronics represented 73.6% of net sales for the three months ended August 31, 2010 compared to 63.3% in the comparable prior year period.
Accessory sales were $34.1 million for the 2011 fiscal second quarter as compared to $45.9 million for the three months ended August 31, 2009, a decrease of 25.6%. The majority of this decline was directly related to lower sales of digital antenna products in the fiscal 2011 second quarter as last fiscal year’s results were positively influenced by the transition from analog to digital technology. Excluding the impact of antennas, accessory sales were down 5.3% which can be attributed to weakness in consumer spending similar to core electronics products. These declines in accessories were partially offset by increased sales in our international business, both in existing business and through the addition of the Schwaiger acquisition. Accessories represented 26.4% and 36.7% of net sales for the three months ended August 31, 2010 and August 31, 2009, respectively.
Gross margins were 21.3% for the period ended August 31, 2010, a 240 basis point improvement from 18.9% reported in the comparable prior year period. The increase in gross margins is a direct result of a shift in the Company’s product mix towards more OEM related products, as well as better margins in the Company’s existing product lines with new product introductions in several product categories. Gross margins were also favorably impacted by reduced costs in freight and warehousing as compared to the prior year period.
Operating expenses increased by $4.5 million or 19.8% from $22.8 million, to $27.3 million for the periods ended August 31, 2009 and August 31, 2010, respectively. The increase in total operating expenses was primarily due to approximately $4.0 million in expenses associated with the Company’s acquisitions of Schwaiger and Invision. In addition, the Company recorded charges for employee stock option costs and professional fees, bad debt expenses associated with a bankruptcy settlement, severance charges associated with the consolidation of a German operating location, and a reinstatement of a portion of the employee salary reductions below the vice president level. As a percentage of net sales, operating expenses increased to 21.1% as compared to 18.2% for the three months ended August 31, 2010 and August 31, 2009, respectively.
The Company reported net income of $0.6 million and earnings per share of $0.03 for the 2011 fiscal second quarter compared to net income of $2.8 million or earnings per share of $0.12 for the 2010 fiscal second quarter. Net income for the 2010 fiscal second quarter included an income tax benefit of $1.6 million.
Lavelle continued, “The slower than anticipated economic recovery has impacted our sales and our bottom-line performance through the first half of the year, but we remain profitable given the steps taken to improve our margins, better align our overhead and improve operating efficiencies. Our OEM presence is growing as are our retail partnerships, and our cash position and balance sheet remain strong. We believe the Company is well positioned to generate both near and long-term value, especially as the economy improves.”
Six-Month Comparisons
Net sales for the six months ended August 31, 2010 were $259.6 million, an increase of 6.1% compared to net sales of $244.7 million reported in the comparable six-month period.
Electronics sales were $189.7 million for the 2011 fiscal six month period as compared to $158.0 million for the six months ended August 31, 2009, an increase of 20.1%. Electronics sales were positively impacted by the acquisitions of Invision Automotive System as well as higher automotive sales driven by new OEM programs and aftermarket sales. These increases were partially offset by declines in certain consumer electronics categories. Electronics represented 73.1% of net sales for the six months ended August 31, 2010 compared to 64.6% in the prior six month period.
Accessory sales were $69.9 million for the six months ended August 31, 2010 as compared to $86.7 million for the six months ended August 31, 2009, a decrease of 19.4%. The majority of this decline was directly related to lower sales of digital antenna products as last fiscal year’s results were positively influenced by the transition from analog to digital technology. Excluding the impact of antennas, accessory sales were up 2.4%. Accessories represented 26.9% and 35.4% of net sales for the six months ended August 31, 2010 and August 31, 2009, respectively.
Gross margins were 21.0% for the six month period ended August 31, 2010, a 200 basis point improvement from 19.0% reported in the comparable six month period. The increase in gross margins is a direct result of a shift in the company’s product mix towards more OEM related products, as well as better margins in the Company’s existing product lines with several new product introductions. Gross margins were also favorably impacted by reduced costs in freight and warehousing as compared to the prior year period.
Operating expenses increased by $10.4 million or 22.8% from $45.5 million, to $55.8 million for the six month periods ended August 31, 2009 and August 31, 2010, respectively. The increase in total operating expenses was primarily due to approximately $6.6 million in expenses associated with the Company’s acquisitions of Schwaiger and Invision. The additional increase in operating expenses is related to charges taken for employee stock option costs, higher professional fees, bad debt expenses associated with a bankruptcy settlement and a reinstatement of a portion of the employee salary reductions below the vice president level. As a percentage of net sales, operating expenses increased to 21.5% as compared to 18.6% for the six months ended August 31, 2010 and August 31, 2009, respectively.
The Company reported net income of $1.8 million and earnings per share of $0.08 for the 2011 fiscal six month period compared to net income of $3.2 million or earnings per share of $0.14 for the 2010 fiscal six month period. Net income for the 2010 fiscal six month period included an income tax benefit of $1.3 million.
Conference Call Information
The Company will be hosting its conference call on Wednesday, October 13 at 10:00 a.m. EDT. Interested parties can participate by visiting www.audiovox.com, and clicking on the webcast in the Investor Relations section or via teleconference (toll-free number: 866-510-0676; international number: 617-597-5361; pass code: 46308111). For those who will be unable to participate, a replay will be available approximately one hour after the call has been completed and will last for one week thereafter (replay number: 888-286-8010; international replay number: 617-801-6888; pass code: 38040798).
About Audiovox
Audiovox (Nasdaq: VOXX) is a recognized leader in the marketing of automotive entertainment, vehicle security and remote start systems, consumer electronics products and consumer electronics accessories. The company is number one in mobile video and places in the top ten of almost every category that it sells. Among the lines marketed by Audiovox are its mobile electronics products including mobile video systems, auto sound systems including satellite radio, vehicle security and remote start systems; consumer electronics products such as MP3 players, digital camcorders, DVRs, Internet radios, clock radios, portable DVD players, multimedia products like digital picture frames and home and portable stereos; consumer electronics accessories such as indoor/outdoor antennas, connectivity products, headphones, speakers, wireless solutions, remote controls, power & surge protectors and media cleaning & storage devices; Energizer®-branded products for rechargeable batteries and battery packs for camcorders, cordless phones, digital cameras and DVD players, as well as for power supply systems, automatic voltage regulators and surge protectors. The company markets its products through an extensive distribution network that includes power retailers, 12-volt specialists, mass merchandisers and an OE sales group. The company markets products under the Audiovox, Advent, RCA, Jensen, Acoustic Research, Energizer, Excalibur, Code Alarm, Invision, Omega, Prestige, Schwaiger, SURFACE and Terk brands.