By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Cobra Electronics reported a 6.1 percent increase in sales to $35.5 million for its third quarter, ended Sept. 30, pushing the company into the black.
Sales in the quarter were up $2 million from $33.5 million in last year's third quarter. Cobra's net income for the quarter was $373,000 vs. last year's third quarter net income of $1.9 million. The lower performance for this year was due to the sale of first-generation mobile navigation and handheld GPS inventory at or near net realizable values established in prior periods, a reserve taken for the sale of mobile navigation products that have been returned as defective products and higher air freight expenses associated with the company's line of lithium ion battery-powered GMRS radios.
The profitable third quarter was a return to profitability after two quarters of losses, according to Jim Bazet, president/CEO of Cobra.
In providing further perspective on Cobra's performance, Bazet said, "A closer examination of results for the third quarter provides a basis for optimism going forward. The release of the NAV ONE 2500 in September set the stage for several generations of mobile navigation products built on a flexible and cutting-edge navigation platform, which will permit faster, less-costly development and more timely product launches. We anticipate that Cobra will sell through our entire production capacity of the NAV ONE 2500 and derivative models in the fourth quarter."
During the conference call with analysts Cobra said that it missed the reset deadline for the fourth quarter at both Best Buy and Circuit City for the NAV ONE 2500 in September, but said the product will be available on the Web sites of both stores. Cobra added it received commitments from retailers including P.C. Richard & Son, Fry's and Amazon.com for the full production run of the 2500.
In addition, Cobra said that it is now producing GPS products on its own platform, which is expected to help drive profitability and improve product timing in GPS going forward.
Cobra also experienced a 19 percent increase in sales of radar-detection products in the quarter compared with last year, and a sales increase of more than 80 percent in marine products. Additionally, the company's new line of lithium ion battery-powered two-way radios continued to experience strong sell through at retail and now account for a significant portion of Cobra's domestic two-way radio business, the company said.
Subsequent to the end of the third quarter, Cobra completed the acquisition of Performance Products. In connection with this acquisition, Cobra entered into an amended and restated loan and security agreement with its lenders. As of Oct. 20, the completion date of the transaction, Cobra had interest-bearing debt of $23.4 million.
Cobra also said it will announce a line of new portable GPS products during International CES in January. — Additional reporting by Amy Gilroy
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.