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Audiovox Posts Q1 Profit, Says Klipsch Results Meeting Plan

7/18/2011 12:01:00 AM Eastern

HAUPPAUGE, N.Y. – Audiovox posted a profit and
higher net sales in its fiscal first quarter and reported
that the main integration of Klipsch and Audiovox is
complete.

Audiovox president/CEO Pat Lavelle Lavelle added
that Klipsch met its plan in its first full quarter as an Audiovox-
owned company.

Net income for the quarter, ended May 31, hit $2.49
million compared with year-ago net income of $1.12
million. Net sales rose by $35 million, or 26.9 percent,
to $165.3 million, but would have been essentially flat
without the addition of $35.1 million in sales from the
Klipsch Group.

In a conference call with investors, Lavelle again
stressed that Audiovox is running Klipsch as a standalone
operation, given the different markets they
serve. The “normal synergies that we would get,
where in many cases we would take out the complete
back end of the business, we are not doing that with
Klipsch,” he said. Nonetheless, he said, “we continue
to look for cost savings in both our domestic and international
operations to drive profitability, things on
the back end such as warehousing, shipping, freight
and G&A expenses.”

Likewise, the company has “no plans of combining
efforts on the part of Klipsch and the other Audiovox
brands,” except perhaps for Klipsch-branded OEM
mobile audio products because Audiovox has “good
contacts, good relationships with customers.” He said
Audiovox “may look to develop a Klipsch audio program
for OEM.”

Other opportunities for Klipsch include expanded
commercial-market sales and international sales, he
said. He pointed to “very good” opportunities that “present
themselves for [Klipsch] to grow with the commercial
accounts they already have,” and he added, “We
think that we can expand beyond that.” The enhanced
commercial effort is “going to take some resources on
our part in engineering and marketing,” he noted.

For Klipsch, international markets also “have a very
good promise for us,” Lavelle said, pointing in part to
the strength of the euro. “With the euro at $1.43, we
are very competitive in euros in Europe, and there’s a
very good demand for our high-end products,” he said.
“The same is true as we look into China. As consumers
gain additional wealth in China, they’ve demonstrated
a desire for high-end quality products, and they’re not
bashful about spending. We think that bodes well for
our business in China as well.”

In other comments about the company’s first-quarter
financial performance, Lavelle noted that, “like most
companies, we’ve been faced with the rising manufacturing
costs from China.” As a result, “to maintain profitability,
over the last 30 to 60 days we announced price
increases pretty much across the board.”

In mobile electronics, first-quarter domestic sales
were up “slightly,” and the mobile OEM business “posted
strong gains driven by new programs with Ford and
increased sales to Porsche,” Lavelle said.

In other OEM comments, he said the company has
been awarded a 2013 program for rear-seat entertainment
for the Nissan Pathfinder and Infiniti QX4, and Audiovox
expects to ship its first Android rear-seat entertainment
system to Bentley in December.

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