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Cobra Q3 Sales Rise 18%, Income Up 46%

10/26/2004 09:16:00 AM Eastern

Chicago — Successful mobile-navigation product debuts, as well as a strong showing from the radar detection and citizens band radio product categories, helped Cobra Electronics post a 17.9 percent increase in third-quarter sales, hitting $31 million, compared with a year-on-year $26.3 million. The company said its international business also climbed sharply.

Net income jumped 46 percent in the third quarter, ended Sept. 30, reaching $571,000, up from $391,000 million. This increase was driven by the company’s rise in net sales and continued management of expenses.

“The intense competition in the two-way radio business continues to impact gross margins as retailers are pushing for lower price points and other incentives to drive traffic,” said Jim Bazet, president/CEO. “However, Cobra was able to offset this decline in gross margin by closely managing selling, general and administrative expenses,” he said. Expenses declined as a percentage of net sales to 23.6 percent in the third quarter from 25.1 percent in the same three months a year earlier.

Among the Cobra products cited for boosting U.S. third-quarter sales are its Navone 3000 mobile navigation system, while a new line of two-way radios and new marine radio products strengthened European sales. Canadian sales also increased substantially when Canada’s government moved to permit the sale of longer-range GMRS two-way radios. Offsetting these increases at Cobra were declines in the company’s domestic two-way radio business, with average selling prices and unit sales reflecting the maturation of the category.

For the nine months, Cobra sales rose 7.3 percent to $78.9 million from a year-on-year $73.5 million, while net income increased 53.6 percent to $530,000 from $345,000.

Cobra expects fourth-quarter sales and earnings to top that of the same period in 2003, Bazet said, but hedged his bets with the comment, “The fourth quarter continues to look strong, although there are warning signs in the economy, such as reduced consumer confidence and high fuel prices that cannot be ignored.”

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