Hauppauge, N.Y. - Audiovox posted higher net income and reversed year-ago operating losses in its fiscal first quarter on a 26.9 percent sales gain due solely to its acquisition of the Klipsch Group.
Net income for the quarter, ended May 31, hit $2.49 million compared with year-ago net income of $1.12 million. Operating earnings hit $3.98 million compared with a year-ago operating loss of $1.49 million. Net sales rose by $35 million, or 26.9 percent, to $165.3 million, but would have been essentially flat without the addition of $35.1 million in sales from the Klipsch Group, whose acquisition was recently concluded.
Sales were in line with projections, and the bottom line exceeded forecasts, said president/CEO Pat Lavelle.
Gross margins rose 500 basis points to 26.4 percent, driven by the addition of Klipsch's high-end audio sales, gains in automotive OEM, and a shift away from lower-margin consumer electronics and fulfillment programs toward higher-margin accessories and mobile electronics, the company said. The company expects future gross margins to hit 25 percent.
Operating expenses increased $11.2 million, primarily because of the Klipsch acquisition.
Overall electronics sales, including Klipsch, were up $37.8 million, or 40 percent, to $132.3 million. Klipsch sales accounted for all but $2.7 million of the increase. Accessory sales were down $2.8 million, or 7.8 percent, to $33 million.
Electronics sales rose because of the Klipsch acquisition, audio and video sales increases, and mobile OEM gains, partially offset by lower sales of consumer goods and satellite-radio products, the company said. Accessory sales fell because of continued slowness in U.S. retail sales, partially offset by international sales gains.
In the company's fiscal fourth quarter, net income rose as sales fell year on year, with both sales of electronics and accessories down.