Tempe, Ariz. - Rockford boosted net income and gross margins in its fiscal third-quarter and year-to-date periods on a 0.7 percent decline in third-quarter sales and a 12.3 percent rise in year-to-date sales.
Sales fell in the third quarter primarily because of declining revenue from Japanese automakers whose supply chains were interrupted by the Japan earthquake earlier this year, the company said.
"We feel good about our overall performance and market, [and] we continue to be cautiously optimistic about the car audio market and our ability to grow in it," said president/CEO William Jackson.
Net sales for the three months, ended Sept. 30, were down 0.7 percent to $14.2 million compared with the year-ago $14.3 million. Net sales for the first nine months of the fiscal year rose 12.3 percent to $47.8 million compared with a year-ago $42.6 million.
Net income for the third quarter rose 71 percent to $1.2 million from a year-ago $700,000, and for the nine-month period, net income rose 68 percent to $4.2 million from a year-ago $2.5 million.
As percent of net sales, gross margins increases during both periods, rising in the quarter to 37.4 percent from a year-ago 36.9 percent. For the nine-month period, gross margin increased to 38.5 percent from the year ago 37 percent.
Operating expenses for the three months fell to $4.1 million from a year-ago $4.5 million but were up for the nine-month period to $14.1 million from a year-ago $13.1 million.
The increase in operating expenses for the nine-month period was due primarily to higher variable expenses, such as outbound freight and commissions, resulting from higher sales as well as from increased sales and promotional expenditures, the company said.
OEM revenues were down for the quarter as well as for the nine-month period, with nine-month OEM revenues falling to $2 million compared with a year-ago $2.2 million, because of interrupted production by Japanese automaker customers. Nonetheless, said Jackson, the company's "OEM business remains stable, and our Japanese based partners have returned to normal production after the earthquake and tsunami that reduced their operations in the second quarter."
All of the company's distribution channels "remain stable and have shown growth year to date," Jackson added. The U.S. market "continues to be bumpy," he said. "Several dealers and distributors have reported improving retail trends, but a lack of floor traffic and fears about general consumer confidence are an ongoing concern."
In other comments, Jackson said the company's "overall supply chain remains in good condition," although Rockford is "experiencing some difficulty with selective part outages, but not to the level of the past 12 to 18 months."
Referring to the continued strengthening of the Chinese currency, he said the rise "may cause additional cost pressures heading into 2012."
In outlining the company's aftermarket performance, Jackson said Rockford Fosgate products "continue to do well in all of our channels" and that its "core line of amplifiers and speakers is tracking up in all channels year to date." The company's Lightning Audio and Brax/Helix brands "continue to gain new dealers every month," he added.