Emerson Radio Shows Strength In Fiscal-Q3 Results
By Jeff Malester -- TWICE, 2/26/2001
PARSIPPANY, N.J .-Although sales in the third fiscal quarter at Emerson Radio were relatively unchanged from the same period a year ago, the consumer electronics distributor reported significant improvement in its bottom-line results, recording its ninth consecutive quarter of earnings growth.
Operating income for the fiscal third quarter ended Dec. 31 climbed 159 percent to $5.6 million, compared with $2.2 million in the year-ago three months. Net income soared 229 percent to $3.7 million, up from $1.1 million in the same quarter in 1999.
Net revenue, however, was relatively flat, declining to $60.1 million in the third quarter from $61.3 million the previous year. This resulted primarily from customers shifting their orders into earlier quarters to assure additional product availability throughout the year, said Emerson.
Gross margins dramatically increased from 20.6 percent in the third quarter, up from 13.6 percent the previous year, due mainly to a more favorable product mix, increased royalty revenue and lower product-return levels.
"We anticipate that the product demand, combined with the broader product assortment and continued expansion into the toy and specialty distribution channels, will benefit Emerson with increased revenues and earnings in future quarters," said chairman/CEO Geoffrey P. Jurick.
Jurick, who said Emerson's Hello Kitty-branded line of products continues to be well received by customers, said new audio products and microwave ovens maintained their strong momentum during the third quarter and continue to do well in the marketplace.
"The increased focus on product and market development efforts, which began several periods ago, continues to generate strong sales growth," said Jurick. "The rise in SG&A expenses was the result of increased costs associated with our national television advertisements for the Smartset clock radio, combined with market-development efforts, which we feel will provide strong benefits in the upcoming fiscal year."
For the nine months, Emerson reported net revenue of $239.8 million, a 49.6 percent jump from the $160.3 million recorded in the year-ago nine months. Operating income in the nine-month period totaled $16.4 million, a 274 percent increase from the $4.4 million reported in 1999. Net income for the nine months was $11.9 million, compared with $2.4 million in 1999.
Looking ahead, Jurick said "The fourth quarter has historically been soft, and we expect that last year's record fourth quarter will return to more traditional levels. For our fiscal year ending March 31, we continue to expect significant year-over-year growth in revenues and earnings."
