HAUPPAUGE, N.Y. - Audiovox reported lower net sales and net income for its fiscal first quarter ended May 31 due to lower satellite radio and portable DVD sales versus the same period last year.
Audiovox reported net sales for the fiscal 2006 first quarter of $111.3 million, a decrease of 23 percent compared to $144.5 million reported in the comparable prior year quarter and an increase of 8 percent sequentially, compared to $103.1 million reported in the transition period ended February 28, 2006.
The company previously changed its fiscal year from November 30 to February 28. As the fiscal 2006 first quarter results will be compared to the comparable year-ago period ended May 31, 2005, which was the company's fiscal 2005 second quarter.
Net income from continuing operations for the fiscal first quarter was $1.8 million compared to net income from continuing operations of $5.8 million in the comparable prior year period and net income from continuing operations of $400,000 reported in last quarter's transition period.
On a pro forma basis for the quarter, taking into consideration non- recurring, one-time adjustments that included the unrealized gain on the Bliss-tel investment and a tax benefit due to the completion of certain tax examinations, net income from continuing operations in the comparable 2005 period would have been $1.2 million.
Including discontinued operations, Audiovox reported net income of $1.5 million for the fiscal first quarter as compared to $5.6 million in the same time last year and $200,000 during the transition period ended February 28, 2006. Similarly, on a pro forma basis, which includes the items mentioned above, net income for the fiscal 2005 second quarter would have been $1.1 million.
Mobile electronics sales, which represented 74.6 percent of net sales, were $83.1 million, a decrease of 10.6 percent compared to sales of $93 million reported in the comparable prior year period. This decline was due primarily to lower sales of satellite radio products. Additionally, lower sales of mobile video products also impacted sales, as Audiovox no longer sells video-in-a-bag products. In the comparable prior year period, mobile electronics comprised 64.3 percent of net sales.
Consumer electronics sales, which represented 25.4 percent of sales, were $28.2 million, a decrease of 45.3 percent compared to net sales of $51.6 million reported in the comparable period last year. This decline is a direct result of significantly lower portable DVD sales brought on by Audiovox’s decision to avoid retail promotions that do not meet minimum profitability targets, the company said. In the fiscal 2005 second quarter, CE comprised 35.7 percent of net sales.
Gross margins for the period ended May 31 were 18.1 percent compared to 15.8 percent reported in the comparable year-ago period and 15.2 percent reported in the transition period ended February 28. The increase in gross margins is related to improved inventory management and the company's focus on improving profitability, Audiovox said.
Pat Lavelle, president/CEO of Audiovox said, “Our focus is to generate higher returns for our company and our shareholders and we believe we have and continue to take the necessary steps to achieve this goal. We are encouraged with the improvement in gross profit margins and we believe that with new product introductions scheduled this year, we are on track to continue to deliver improving results, which will ultimately lead to better operating performance.”
Operating expenses for the fiscal 2006 first quarter were $20.2 million as compared to $22.2 million in the comparable fiscal 2005 second quarter, a decrease of 9.3 percent.
Audiovox also reported that its board approved a new stock repurchase program which authorizes the company to repurchase on the open market up to 2 million shares of the company's common stock. This now brings the total shares available for repurchase to 2.15 million. The shares will be purchased in open market transactions or privately negotiated transactions at the company's discretion, Lavelle said.