Audiovox Corporation announced financial results for its fiscal 2011 third quarter ended November 30, 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 Third Quarter and Nine Month Results
– Sales for the quarter up 4.8%, driven by continued growth in mobile electronics.
– Gross margins increase 180 basis points due to higher margins in all product categories.
– Operating income increased to $5.4 million from $3.1 million in the comparable third quarters.
HAUPPAUGE, N.Y., Jan. 10, 2011 — Audiovox Corporation (Nasdaq: VOXX), today announced results for its Fiscal 2011 third quarter ended November 30, 2010.
Commenting on the Company’s performance, Pat Lavelle, President and CEO stated, “During the third quarter, our automotive business, both in the aftermarket and at the OE level, continued to offset the weakness in our consumer and accessory categories. Concerns over the state of the U.S. economy remain and while our sales in these groups are lower than last year, we gained several new retail accounts, which is encouraging for the future. Additionally, our international business continues to grow. What was most pleasing was our 3Q margin improvement, as it was across the board in all of our segments. We still have concerns about the U.S. market, though we believe business conditions will improve as we move into our next fiscal year.”
Fiscal Third Quarter Comparisons
Net sales for the third quarter ended November 30, 2010 were $163.2 million, an increase of 4.8% compared to net sales of $155.7 million reported in the comparable year ago period.
Electronics sales were $122.7 million for the 2011 fiscal third quarter as compared to $109.7 million for the three months ended November 30, 2009, an increase of 11.8%. Electronics sales were positively impacted by higher sales of mobile electronics products, particularly in automotive security and from new OEM programs, as well as from the Company’s Invision acquisition. These increases were partially offset by declines in select retail categories. Electronic sales represented 75.2% of net sales for the three months ended November 30, 2010 compared to 70.5% in the comparable prior year period.
Accessory sales were $40.5 million for the 2011 fiscal third quarter as compared to $45.9 million for the three months ended November 30, 2009, a decrease of 11.9%. At the retail level, the Accessories group continues to be impacted by slower sales for electronics products utilizing our accessories, partially offset by modest increases in select remote control lines and in the Company’s international operations. Accessory sales represented 24.8% of our net sales for the three months ended November 30, 2010 as compared to 29.5% in the comparable prior year period.
Gross margins were 21.2% for the fiscal 2011 third quarter ended November 30, 2010, a 180 basis point improvement from 19.4% reported in the comparable prior year period. During the 2011 fiscal third quarter, the Company experienced increases in gross profit margins in every category, both domestically and internationally. Contributing to this improvement was the shift in the product mix, most notably higher sales in the automotive market, as well as reduced costs in freight and warehousing as compared to the prior year period.
Operating expenses increased by $2.1 million or 7.8% from $27.1 million to $29.2 million for the three month periods ended November 30, 2009 and November 30, 2010, respectively. The increase in total operating expenses was primarily due to higher expenses associated with the Company’s acquisitions of Schwaiger and Invision, which accounted for $2.6 million of the increase in the fiscal 2011 third quarter compared to Fiscal 2010 results. Prior to incremental expenses related to acquisitions, the Company’s operating expenses declined by $0.5 million for the comparable periods primarily as a result of a decrease in general and administrative expenses. As a percentage of net sales, operating expenses were 17.9% as compared to 17.4% for the three months ended November 30, 2010 and November 30, 2009, respectively.
The Company reported operating income of $5.4 million for the three months ended November 30, 2010 as compared to operating income of $3.1 million in the comparable year ago period. Net income for the three months ended November 30, 2010 was $3.9 million or $0.17 per share as compared to net income of $12.6 million or earnings per share of $0.55. The fiscal 2010 third quarter included an income tax benefit of $9.0 million as compared to an income tax expense of $2.0 million recorded in the fiscal 2011 third quarter.
Lavelle continued, “We took aggressive steps last year to improve our margins and I believe that has been reflected in our results in each quarter this fiscal year. We also lowered our overhead by over $22 million, less acquisitions and we continue to monitor our expense structure, looking for synergies and optimum utilization of our resources. We remain on track for sales increases and profitability this fiscal year, though the true profit potential for Audiovox directly correlates to our top-line. We are working diligently to grow our retail presence, expand our automotive distribution, and introduce innovative products that will resonate with our partners and consumers – many of which were on display and in demand at the Consumer Electronics Show last week in Las Vegas.”
Nine-Month Comparisons
Net sales for the nine months ended November 30, 2010 were $422.8 million, an increase of 5.6% compared to net sales of $400.4 million reported in the comparable nine-month period.
Electronics sales were $312.4 million for the 2011 fiscal nine-month period as compared to $267.7 million for the nine months ended November 30, 2009, an increase of 16.7%. Electronics sales were positively impacted by the acquisitions of Invision Automotive System as well as higher sales of mobile electronics products in the aftermarket and at the OEM level, partially offset by declines in sales of portable DVD players and other consumer electronics categories. Electronics represented 73.9% of net sales for the nine months ended November 30, 2010 compared to 66.9% in the prior nine-month period.
Accessory sales were $110.4 million for the nine months ended November 30, 2010 as compared to $132.6 million for the nine months ended November 30, 2009, a decrease of 16.8%. A large portion 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. The Accessories group has also been impacted by the general slowdown in consumer electronics sales at retail. Accessories represented 26.1% and 33.1% of net sales for the nine months ended November 30, 2010 and November 30, 2009, respectively.
Gross margins were 21.1% for the nine-month period ended November 30, 2010, a 190 basis point improvement from 19.2% reported in the comparable nine-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 $12.5 million or 17.2% from $72.6 million, to $85.0 million for the nine-month periods ended November 30, 2009 and November 30, 2010, respectively. The increase in total operating expenses was primarily due to approximately $10.1 million in incremental expenses associated with the Company’s acquisitions of Schwaiger and Invision. The additional increase in operating expenses is related to charges for employee stock option costs, higher 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 reductions originally instituted in the salary reduction program to all employees below the vice president level. As a percentage of net sales, operating expenses decreased to 20.1% as compared to 18.1% for the nine months ended November 30, 2010 and November 30, 2009, respectively.
The Company reported operating income of $4.1 million for the nine months ended November 30, 2010 as compared to operating income of $4.2 million in the comparable year ago period. Net income for the nine months ended November 30, 2010 was $5.6 million or $0.24 per share as compared to net income of $15.9 million or earnings per share of $0.69. The fiscal 2010 nine-month period included an income tax benefit of $10.3 million as compared to an income tax expense of $1.8 million recorded in the nine-month period in Fiscal 2011.
Conference Call Information
The Company will be hosting its conference call on Tuesday, January 11, 2011 at 10:00 a.m. Eastern. 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: 800-237-9752; international number: 617-847-8706; pass code: 83022516). 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: 55330276).
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. For additional information, visit our Web site at www.audiovox.com.
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Audiovox Corporation and Subsidiaries Consolidated Balance Sheets (In thousands, except share data) |
|||||||||
|
November |
February |
||||||||
|
2010 |
2010 |
||||||||
|
Assets |
(unaudited) |
||||||||
|
Current assets: |
|||||||||
|
Cash and cash equivalents |
$ |
37,823 |
$ |
69,511 |
|||||
|
Short-term investments |
24,558 |
– |
|||||||
|
Accounts receivable, net |
131,668 |
131,266 |
|||||||
|
Inventory |
133,351 |
102,717 |
|||||||
|
Receivables from vendors |
8,037 |
11,170 |
|||||||
|
Prepaid expenses and other current assets |
13,019 |
16,311 |
|||||||
|
Income tax receivable |
– |
1,304 |
|||||||
|
Deferred income taxes |
48 |
47 |
|||||||
|
Total current assets |
348,504 |
332,326 |
|||||||
|
Investment securities |
11,467 |
15,892 |
|||||||
|
Equity investments |
12,926 |
11,272 |
|||||||
|
Property, plant and equipment, net |
20,229 |
22,145 |
|||||||
|
Goodwill |
8,212 |
7,389 |
|||||||
|
Intangible assets |
95,665 |
97,226 |
|||||||
|
Deferred income taxes |
528 |
515 |
|||||||
|
Other assets |
2,485 |
2,213 |
|||||||
|
Total assets |
$ |
500,016 |
$ |
488,978 |
|||||
|
Audiovox Corporation and Subsidiaries Consolidated Balance Sheets (In thousands, except share data) |
|||||||||
|
November |
February |
||||||||
|
2010 |
2010 |
||||||||
|
Liabilities and Stockholders’ Equity |
(unaudited) |
||||||||
|
Current liabilities: |
|||||||||
|
Accounts payable |
$ |
38,276 |
$ |
36,126 |
|||||
|
Accrued expenses and other current liabilities |
34,721 |
35,790 |
|||||||
|
Accrued sales incentives |
15,338 |
10,606 |
|||||||
|
Income taxes payable |
1,011 |
– |
|||||||
|
Deferred income taxes |
1,895 |
1,931 |
|||||||
|
Bank obligations |
2,183 |
1,703 |
|||||||
|
Current portion of long-term debt |
2,712 |
6,383 |
|||||||
|
Total current liabilities |
96,136 |
92,539 |
|||||||
|
Long-term debt |
5,408 |
6,613 |
|||||||
|
Capital lease obligation |
5,384 |
5,490 |
|||||||
|
Deferred compensation |
3,601 |
3,158 |
|||||||
|
Other tax liabilities |
1,219 |
1,219 |
|||||||
|
Deferred tax liabilities |
8,243 |
8,502 |
|||||||
|
Other long-term liabilities |
6,168 |
7,194 |
|||||||
|
Total liabilities |
126,159 |
124,715 |
|||||||
|
Commitments and contingencies |
|||||||||
|
Stockholders’ equity: |
|||||||||
|
Series preferred stock, $.01 par value; 1,500,000 shares authorized, no shares issued or outstanding |
– |
– |
|||||||
|
Common stock: |
|||||||||
|
Class A, $.01 par value; 60,000,000 shares authorized, 22,545,337 and 22,441,712 shares issued and 20,727,505 and 20,622,905 shares outstanding at November 30, 2010 and February 28, 2010, respectively |
225 |
225 |
|||||||
|
Class B convertible, $.01 par value; 10,000,000 shares authorized, 2,260,954 shares issued and outstanding at November 30, 2010 and February 28, 2010 |
22 |
22 |
|||||||
|
Paid-in capital |
277,468 |
275,684 |
|||||||
|
Retained earnings |
119,619 |
113,996 |
|||||||
|
Accumulated other comprehensive loss |
(5,091) |
(7,278) |
|||||||
|
Treasury stock, at cost, 1,818,807 shares of Class A common stock at November 30, 2010 and February 28, 2010 |
(18,386) |
(18,386) |
|||||||
|
Total stockholders’ equity |
373,857 |
364,263 |
|||||||
|
Total liabilities and stockholders’ equity |
$ |
500,016 |
$ |
488,978 |
|||||
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Audiovox Corporation and Subsidiaries Consolidated Statements of Operations For the three and nine months ended November 30, 2010 and 2009 (In thousands, except share and per share data) (unaudited) |
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|
Three Months Ended |
Nine Months Ended |
||||||||||||||||
|
November 30, |
November 30, |
||||||||||||||||
|
2010 |
2009 |
2010 |
2009 |
||||||||||||||
|
Net sales |
$ |
163,167 |
$ |
155,657 |
$ |
422,778 |
$ |
400,354 |
|||||||||
|
Cost of sales |
128,570 |
125,431 |
333,650 |
323,604 |
|||||||||||||
|
Gross profit |
34,597 |
30,226 |
89,128 |
76,750 |
|||||||||||||
|
Operating expenses: |
|||||||||||||||||
|
Selling |
9,498 |
8,026 |
25,951 |
21,188 |
|||||||||||||
|
General and administrative |
16,674 |
16,521 |
50,034 |
44,555 |
|||||||||||||
|
Engineering and technical support |
3,023 |
2,543 |
9,052 |
6,819 |
|||||||||||||
|
Total operating expenses |
29,195 |
27,090 |
85,037 |
72,562 |
|||||||||||||
|
Operating income |
5,402 |
3,136 |
4,091 |
4,188 |
|||||||||||||
|
Other income (expense): |
|||||||||||||||||
|
Interest and bank charges |
(471) |
(394) |
(1,392) |
(1,097) |
|||||||||||||
|
Equity in income of equity investees |
600 |
452 |
2,348 |
1,201 |
|||||||||||||
|
Other, net |
363 |
448 |
2,363 |
1,303 |
|||||||||||||
|
Total other income (expense), net |
492 |
506 |
3,319 |
1,407 |
|||||||||||||
|
Income before income taxes |
5,894 |
3,642 |
7,410 |
5,595 |
|||||||||||||
|
Income tax expense (benefit) |
2,035 |
(9,003) |
1,786 |
(10,298) |
|||||||||||||
|
Net income |
$ |
3,859 |
$ |
12,645 |
$ |
5,624 |
$ |
15,893 |
|||||||||
|
Net income per common share (basic) |
$ |
0.17 |
$ |
0.55 |
$ |
0.25 |
$ |
0.69 |
|||||||||
|
Net income per common share (diluted) |
$ |
0.17 |
$ |
0.55 |
$ |
0.24 |
$ |
0.69 |
|||||||||
|
Weighted-average common shares outstanding (basic) |
22,934,211 |
22,881,402 |
22,904,746 |
22,872,965 |
|||||||||||||
|
Weighted-average common shares outstanding (diluted) |
23,098,948 |
22,936,346 |
23,057,969 |
22,911,792 |
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