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Adversely impacted by a sales decline in private-label products and lower priced satellite radio units, revenue for the mobile electronics segment at Audiovox — which represented 68.7 percent of company net sales — declined just over 5 percent to $70.8 million for the three months ended Feb. 28, down from $74.7 million in the year-ago period.
Consumer electronics, which represented 31.3 percent of net sales for the quarter, reported revenue of $32.2 million, a 22 percent slide from sales of $41.3 million in the same period the prior year. The decrease was due primarily to lower sales of portable DVD and LCD flat-panel TVs, as a result of a non-recurrence of one-time retail promotional offers that occurred in the prior-year comparable period.
Offsetting the declines in the mobile electronics business were increased sales generated by the Terk product line, which was acquired in January of 2005, higher sales of Jensen mobile multimedia product lines and higher sales of the company's DVD Shuttle system.
“While our sales were off vs. the comparable period last year, there are several lines that are no longer in the product mix and there were a number of one-time retail promotions that took place last year and did not repeat this year,” said Pat Lavelle, president/CEO.
“Most of our product lines are performing well, and as we gear up for new product introductions over the next 90 days and beyond, we feel confident that we will begin posting stronger results, both on the top and bottom lines,” Lavelle said.
Consolidated net sales for the three months declined 11.1 percent to $103.1 million, compared with a year-on-year $116 million.
Net income from continuing operations was $367,000, moving into the black, compared with a net loss of $552,000 in the same period last year. Net income for the three months reached $183,000, compared with a loss of $1.2 million a year earlier. Net income was favorably impacted by a tax benefit of $1.9 million during the period ending Feb. 28, 2006.
Gross margin for the three months climbed to 15.2 percent, up from a year-ago 13.9 percent. The increase was due primarily to higher margins in the mobile video category, as new mobile video products were introduced earlier this year; higher margins associated with the Jensen product line; and a reduction in lower-margin products in the portfolio mix which are now considered “discontinued,” said Audiovox.
Expenses in the three months reached $18.8 million, down 14 percent from the $21.9 million posted in the fiscal first quarter, ended Feb. 28, 2005. The reduction was seen in most areas, said the company, due to lower sales volume. Corporate expenses were down due to reduced advertising costs, officer salaries and professional fees.
“Our results this quarter reflect many of the changes that were implemented over the past six months, and we believe we're on track to restoring historical profitability levels in the near future,” said Lavelle. “We are especially pleased with the outlook for our satellite radio, mobile video, mobile multimedia and LCD TV lineup in fiscal 2006.”
The Audiovox financial results were reported for what the company calls a transition period, ending Feb. 28, 2006, as the company changed its fiscal-year end from Nov. 30 to Feb. 28.