Tempe, Ariz. — Rockford reported lower net income and sales for the second quarter, ended June 30, citing slower sales at big-box stores and mass merchants in car electronics, slower car sales and higher raw-material prices.
Net income was 0.8 million, down from $1 million for the period a year ago. Net sales fell 18.5 percent to $21.8 million, from $26.7 million for the year ago period.
However, looking at the first half of the year, net income was up, totaling $0.7 million compared with $0.1 million for the first half in 2007. Sales for the first half were down, totaling $40.2 million, compared with $53.1 million for the first half in 2007. Sales included new and end-of-life product shipments.
Rockford president William Jackson said, "The mobile electronics business in the U.S. has been hit hard by recent economic conditions. New car sales continue to soften and truck and SUV sales remain especially weak. We continue to see mixed results from the retail market. Our big-box and mass-retail partners have experienced softness in the mobile electronics sector. At the same time some specialist retailers are reporting sales that are flat or slightly up, but those results are fragmented throughout the U.S."
Chief financial officer Rich Vasek stated, "We have seen significant increases in our raw-material and finished-goods costs. Specifically, copper and aluminum prices have contributed to significant cost increases in the last 12 months. Our inbound and outbound freight costs have also continued to climb this year. As a result of these increases, we announced a price increase to our dealers and distributors in June that will become effective this month."
Jackson said, however, that the company’s internal restructuring and outsourcing resulted in improved margins for the quarter. “Our balance sheet and overall profitability continue to improve. However, we continue to be cautious about the current business environment."
As a percent of net sales, gross margin for the quarter increased to 35 percent compared with 31.4 percent for the same period in 2007.
Operating expenses increased 4.8 percent to $7.4 million compared with $7.0 million last year and included special charges related to executive compensation.
Jackson said slower truck and SUV sales impacted its OEM business with Nissan, although, "Mitsubishi continues to do well, particularly in the international markets."