Audiovox Posts Q1 Profit, Says Klipsch Results Meeting Plan



Audiovox posted a profit and higher net sales in its fiscal first quarter and reported that the main integration of Klipsch and Audiovox is complete.

Audiovox president/CEO Pat Lavelle Lavelle added that Klipsch met its plan in its first full quarter as an Audiovox- owned company.

Net income for the quarter, ended May 31, hit $2.49 million compared with year-ago net income of $1.12 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.

In a conference call with investors, Lavelle again stressed that Audiovox is running Klipsch as a standalone operation, given the different markets they serve. The “normal synergies that we would get, where in many cases we would take out the complete back end of the business, we are not doing that with Klipsch,” he said. Nonetheless, he said, “we continue to look for cost savings in both our domestic and international operations to drive profitability, things on the back end such as warehousing, shipping, freight and G&A expenses.”

Likewise, the company has “no plans of combining efforts on the part of Klipsch and the other Audiovox brands,” except perhaps for Klipsch-branded OEM mobile audio products because Audiovox has “good contacts, good relationships with customers.” He said Audiovox “may look to develop a Klipsch audio program for OEM.”

Other opportunities for Klipsch include expanded commercial-market sales and international sales, he said. He pointed to “very good” opportunities that “present themselves for [Klipsch] to grow with the commercial accounts they already have,” and he added, “We think that we can expand beyond that.” The enhanced commercial effort is “going to take some resources on our part in engineering and marketing,” he noted.

For Klipsch, international markets also “have a very good promise for us,” Lavelle said, pointing in part to the strength of the euro. “With the euro at $1.43, we are very competitive in euros in Europe, and there’s a very good demand for our high-end products,” he said. “The same is true as we look into China. As consumers gain additional wealth in China, they’ve demonstrated a desire for high-end quality products, and they’re not bashful about spending. We think that bodes well for our business in China as well.”

In other comments about the company’s first-quarter financial performance, Lavelle noted that, “like most companies, we’ve been faced with the rising manufacturing costs from China.” As a result, “to maintain profitability, over the last 30 to 60 days we announced price increases pretty much across the board.”

In mobile electronics, first-quarter domestic sales were up “slightly,” and the mobile OEM business “posted strong gains driven by new programs with Ford and increased sales to Porsche,” Lavelle said.

In other OEM comments, he said the company has been awarded a 2013 program for rear-seat entertainment for the Nissan Pathfinder and Infiniti QX4, and Audiovox expects to ship its first Android rear-seat entertainment system to Bentley in December.


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