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Audiovox Posts Higher Q3 Net Profits, Lower Sales

1/12/2010 09:23:18 AM Eastern
Hauppauge, N.Y. - Audiovox reported higher net profits,but lower net sales for its fiscal third quarter, ended Nov. 30.

Audiovox had net income of $12.6 million for the quarter, compared with net income of $6.5 million for the prior year's quarter. During the fiscal 2010 third quarter, the company recorded a tax benefit that favorably impacted net income by $9 million. Excluding the impact of this tax benefit, pretax income for the fiscal 2010 third quarter was $3.6 million.

Net sales for the fiscal 2010 third quarter were $155.7 million, compared with net sales of $195.6 million reported in the prior year period, a decrease of 20.4 percent.

Accessories sales increased 5.2 percent, from $43.7 million, to $45.9 million, and electronics sales decreased 27.8 percent, from $152 million, to $109.7 million. As a percentage of net sales, electronics represented 70.5 percent and 77.7 percent for the periods ended Nov. 30, 2009, and Nov. 30, 2008, respectively. Accessories represented 29.5 percent and 22.3 percent for the similar periods.

The increase in accessories sales can be attributed to sales generated from the acquisition of Schwaiger and higher sales of Acoustic Research product lines, as well as the addition of new customers in the first half of the year, which had a positive impact on fiscal 2010 third quarter results, the company said.

The decline in electronics was primarily attributed to lower sales of consumer electronics products as the company chose not to participate in several Black Friday promotions due to lower margin structures as well as lower retail buying based on its anticipation of lower holiday sales.

Mobile electronics product sales were up, primarily as a result of higher sales of satellite radio products.

"Through the first nine months of the year, we have been profitable despite lower sales volumes, which were anticipated and planned for given the current economic climate and the factors which impacted last year's results. We have taken aggressive steps to lower our overhead and improve margins, while managing our buying programs to position Audiovox for continued profitability in future periods," said Pat Lavelle, president/CEO, in a prepared statement.

"While our sales may be lower, our margins are up, our overhead is down and in line with expected sales and we are looking forward to our fourth quarter and fiscal 2011 prospects," he said.

Lavelle continued, "We could have generated higher sales during the quarter but made a conscious decision to pass on low margin deals and limit our inventory risk. I believe this strategy will benefit our company as our inventory position has improved relative to last year. Furthermore, our December sales were up, we have a lot of programs underway, and new products slated for introduction in the spring and fall of 2010. All in all and barring any decline in the global economies, I believe next fiscal year will be a year of increased sales, profits and returns for our shareholders."
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