Directed Electronics Sales Soar 69.2%

By Jeff Malester -- TWICE, 4/10/2006

Vista, Calif. — Directed Electronics recorded a 69.2 percent increase in fourth-quarter net sales, rising to $135.5 million, up from $80.1 million in the year-ago three months, driven by the continued momentum of its security and entertainment business, as well as strong growth of its Sirius satellite radio product sales.

Gross sales of security and entertainment products reached $62.4 million in the fourth quarter, ended Dec. 31, an increase of 7.2 percent over the prior year's $58.2 million. Gross sales of satellite radio products in the quarter more than tripled, hitting $75.9 million, compared with $24.6 million in the same quarter in 2004.

Pro forma net income increased to $11.1 million in the fourth quarter, up from a pro forma $7.2 million year-on-year. Including items and charges, the company reported a net loss of $10.3 million in the fourth quarter, compared with $7.2 million in income in the same three months the prior year.

Gross margin, as reported, slipped to 29.3 percent in the fourth quarter, compared with 37.9 percent a year ago. The drop was due to the company's product mix shifting toward lower margin satellite radio products.

For the 12 months, Directed Electronics net sales reached $304.6 million, a 66.1 percent increase over the pro forma $183.4 million recorded the previous year. Including a one-time $6.5 million royalty payment, 2004 sales reached $189.9 million, a 60.4 percent jump.

Gross sales of security and entertainment products hit $190.5 million for the 12 months, up 19.2 percent from the $159.9 million posted the prior year. Gross sales of satellite products for the 12 months climbed 310.8 percent, to $120.9 million, compared with the previous year's $29.4 million.

Pro forma net income for the 12 months hit $17 million, up from a pro forma $13.2 million in 2004. Including charges and items, the company reported a net loss of $5.1 million for the 12 months, compared with income of $14 million a year earlier.

Gross margin in the full year declined to 33 percent, as reported, down from a year-ago 42.8 percent, due again to a product mix shift toward lower margin products and also to the one-time $6.5 million royalty payment received in 2004.