Audiovox Reports Quarterly Loss
By Jeff Malester -- TWICE, 4/18/2005
Hauppauge, N.Y. — Despite posting lower-than-expected margin and profit during its fiscal first quarter — as well as a slide in sales — Audiovox's executives remain confident about growth during the remainder of the year.
Net sales from continuing operations dropped 14 percent in the first quarter, ended Feb. 28, coming in at $116 million, down from $135.4 million in the year-ago period.
The company recorded a net loss of $1.2 million, including discontinued operations, for the fourth quarter, compared with net income of $1.9 million in the same three months a year earlier, due primarily to decreased sales and gross margin, which were partially offset by increased “other” income. The loss from continuing operations during the quarter was $552,000, compared with income of $696,000 in the comparable prior-year period.
Gross margin in the first quarter was 13.9 percent, down from 15.6 percent year-on-year, which continues to reflect price erosion in the mobile video and DVD categories, said Audiovox. The company said gross margin is expected to improve in the second half.
Mobile electronics, which represented 64.4 percent of the company's net sales in the first quarter, came in at $74.7 million, down 16.2 percent, compared with the $89.1 million reported in the first quarter of last year. The decline was primarily blamed on continuing price erosion and competition within the mobile video category.
Consumer electronics, which accounted for 35.6 of the company's net sales in the first quarter, was reported at $41.3 million, a drop of 10.7 percent from the $46.3 million reported year-on-year. The slide was attributed mainly to a shift in large load-in orders that moved from the first quarter of 2004 to the second quarter in 2005.
“Despite the first quarter performance, we remain on target with our sales guidance for the full fiscal year, excluding any acquisitions that may arise,” said John Shalam, chairman/CEO.
“Several reductions in overhead have already been instituted, and we expect to take further steps in the quarters ahead. And while our margins and profits were lower than anticipated this quarter, they should rise during the second half as excess products move out of inventory and newer products in both the mobile and consumer categories are introduced."
Shalam added, “It is our goal to put the capital raised from our prior-year sales of our cellular business to use in growing our company both internally and through acquisition.”
