Directed Reports Record Sales, Net For Year, Q4
By Steve Smith -- TWICE, 3/16/2007
Vista, Calif. — Directed Electronics reported record sales and net income results for the fourth quarter and year, ended Dec. 31, 2006.
Net sales in the fourth quarter of 2006 were $210 million, an increase of 55 percent over the prior year fourth-quarter net sales of $136 million. Gross sales of security and entertainment products in the fourth quarter of 2006 were $104 million, an increase of 66 percent over the prior year fourth quarter.
Directed said Polk Audio represented $28 million of gross security and entertainment sales in the fourth quarter of 2006. Gross sales of satellite radio products were $114 million, an increase of 50 percent over the prior year’s fourth quarter.
Pro forma net income for the quarter increased 46 percent to $16 million compared with pro forma net income of $11 million in the prior year period. GAAP net income for the fourth quarter was $10.8 million compared with a GAAP net loss of $9.6 million in the prior year period.
For the full year, net sales were $438 million, an increase of 44 percent over the prior year's net sales of $305 million. Gross sales of security and entertainment products, including $30 million attributable to Polk Audio, were $229 million, an increase of 20 percent over the prior year. Gross sales of satellite radio products were $220 million, an increase of 82 percent over the prior year.
Pro forma net income for the year, ended Dec. 31, 2006, was $27.3 million, a 63 percent increase over the $16.8 million. GAAP net income for the year increased to $21 million, compared with a net loss of $5.1 million.
Pro forma gross profit for the fourth quarter of 2006 increased 46 percent to $60.7 million, or 28.9 percent of net sales, compared with $41.5 million, or 30.6 percent of net sales, in the prior year period. The gross margin decrease in the fourth quarter of 2006 was primarily due to increased sales of satellite radio receivers to Sirius.com, a lower margin customer.
For the full year pro forma gross profit increased 27.8 percent to $129 million, or 29.5 percent of net sales, compared with $101 million in 2005, or 33 percent of net sales. The decrease in gross margin for the year was due to product mix shifting toward satellite radio products, partially offset by the favorable effect of the higher margin Polk Audio sales.
“As we enter 2007, Directed holds the No. 1 position in the security and convenience market, and through our strategic partnership with Sirius, we also hold the leading position in the satellite radio receiver aftermarket. With the addition of Polk Audio to the Directed family of brands which includes Definitive Technology, we now also hold the number one position in the U.S. home speaker market. This means we are the leader in three key areas of our business — vehicle security and convenience, satellite radio and home audio speakers,” stated Jim Minarik, Directed's president/CEO.
“Directed achieved record sales and earnings in 2006. We enter 2007 with expanded distribution channels and the most diversified portfolio of leading brands in our company's history. In 2007, we are well positioned for continued strong top line growth as we receive the full benefit of the four acquisitions we completed in 2006, including Polk Audio, and we continue to expand our market leadership in security, entertainment and satellite radio,” Minarik noted.
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