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Audiovox reported a 15.2 percent gain in net sales and higher net income for its fiscal first quarter that ended May 31, with accessories giving the supplier a major boost.
Net sales for the fiscal first quarter were $128.3 million, an increase of 15.2 percent compared with $111.3 million reported in the comparable prior year quarter. Net income was $2.2 million in the quarter compared with net income of $1.5 million in last year's fiscal first quarter.
As of March 1, the company changed its reporting structure to reflect its new realignment and will now be reporting consolidated net sales by two product categories, accessories and electronics.
Accessories sales increased approximately 743.8 percent to $33.3 million in the fiscal 2008 first quarter, up from $3.9 million in the similar period last year.
This increase was due to incremental sales generated from the recently acquired Thomson and Oehlbach operations. As a percentage of net sales, accessories represented 25.9 percent compared with 3.5 percent in the fiscal 2007 first quarter. Audiovox expects accessory sales to represent a higher percentage of total net sales as compared with the prior year.
Electronics sales, which include both mobile and consumer electronics were $95.0 million, a decrease of 11.5 percent compared with $107.4 million reported in the same period last year. This decline was due to lower sales of consumer goods, primarily LCD TVs and portable DVDs. Impacting these two categories were shortages of flat-panel displays, which has been experienced industrywide.
Offsetting these declines were improved year-over-year sales in the Jensen Mobile, Phase Linear and Satellite Radio product lines which had an increase of 7.4 percent. Electronics sales represented approximately 74.1 percent of net sales in the fiscal 2008 first quarter compared with 96.5 percent in the similar period last year.
Gross margins for the period, ended May 31, were 18.1 percent, in line with the prior year period. Gross margins this quarter were favorably impacted by higher margins associated with the recently acquired accessories companies as well as improved margins in the company's core electronic products offering.
Operating expenses were $24.8 million as compared with $20.2 million in the comparable fiscal 2007 quarter, up 22.9 percent. This increase of $4.6 million is due to the recently acquired Thomson and Oehlbach operations, which had total operating expenses of $5.5 million for the three months ended May 31.
Net income from continuing operations for the fiscal 2008 first quarter was $121,000. This compares to net income from continuing operations of $1.8 million in the fiscal 2007 first quarter. Net income from discontinued operations was $2.1 million compared with a net loss of $260,000 in the comparable quarter.
Pat Lavelle, president/CEO of Audiovox stated, "I am particularly encouraged by the performance of our Accessories Group and the progress we have made in our realignment efforts. While the impact of our efforts is not fully reflected in our first quarter performance, given higher costs associated with the transition, we fully expect that the addition of the accessories product lines, both domestically and internationally, will have a positive impact to our top and bottom line performance this fiscal year."
Lavelle continued, "Industrywide shortages of flat-panel displays are a concern today and market challenges remain. Our sales this quarter were impacted by supply issues, and we expect this to continue for the foreseeable future. However, we have seen strong demand for our satellite radio, mobile multimedia and Phase Linear products and have seen an increase in gross margins across many consumer and mobile electronics offerings. We believe we are on track to post increased sales, higher gross profit margins and better bottom-line results compared to last year."
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