Nortek’s AVC Sales, Operating Loss Up In Q3 - Twice

Nortek’s AVC Sales, Operating Loss Up In Q3

Loss attributed to technology shifts, inefficiencies in combining businesses.
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Providence, R.I. — Sales rose in Nortek’s AVC segment (audio, video and control solutions) segment in the third quarter by 1.5 percent to $47.6 million, but the segment’s operating loss almost tripled to $6.3 million compared with a year-ago loss of $2.2 million.

For the nine-month period, sales were off 9.9 percent to $120.5 million, and operating losses more than doubled to $19.1 million compared with the year-ago $8.3 million operating loss.

The AVC segment mainly consists of residential audio/video equipment (including architectural speakers and power conditioners) and home-control equipment, but it also includes professional video signal-management solutions. Brands include Elan, Niles, SpeakerCraft, Proficient, and Xantech.

The slight gain in third-quarter sales was attributed to sales of video products for a “specific customer project,” but the rest of the segment declined because of “technology changes that affect certain product categories that the businesses compete in,” the company said. “This has caused demand to shift from certain of our legacy products to newer technologies.”

“Continued weakened demand for our audio, video and control products contributed to the decline in operating results for the entities included within the combined AVC segments,” the company said.

The segment’s third-quarter operating performance was also affected by sales discounts offered on certain legacy products, “inefficiencies experienced in the combination of certain businesses,” and “the shifting of logistics to a third-party provider,” the company added.

Separately, the company noted that the segment took a second-quarter impairment charge of about $74.7 million for intangible assets, primarily trademarks, customer relationships and developed technology, about $4.4 million for goodwill, and about $1.3 million for property and equipment.

Nortek’s consolidated sales rose 9.1 percent to $642.9 million, with net earnings rising 9.5 percent to $4.6 million. For the nine-month period, sales were off 9.8 percent to $1.91 billion, and operating losses hit $50.2 million in contrast to a year-ago net profit of $600,000.

Nortek’s other businesses include residential and commercial HVAC, security, and ergonomic and productivity solutions, such as display mounts.

For fiscal 2013, consolidated net sales increased 3.9 percent to $2.29 billion, operating earnings fell 31 percent to $87.9 million, and the company posted a net loss of $8.3 million compared with 2012 net earnings of $9.5 million.

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