Knobias Clip Report (01-12-20009) VOXX
Submitted By Knobias ClipReport
VOXX: CEO Discusses Record Q3 Sales and Outlook w/New Industry Partnerships
By Fain Hughes, fhughes@knobias.com
Shares of Audiovox Corporation (VOXX) surged during Monday’s session after the Company reported its results for the third quarter ended November 30, 2008.
Net sales for the quarter ended November 30, 2008 were $195.6 million compared to net sales of $183.6 million reported in the comparable prior year period. Net income for the quarter was $6.5 million, or earnings per diluted share of $0.29, compared to net income of $4.7 million, or $0.20 per diluted share, in the comparable fiscal 2008 period.
Patrick M. Lavelle, President and CEO of Audiovox, commented in a conference call today, “This was the largest sales quarter in the Company’s history for electronics and accessories. Given the economic climate, this was no simple feat. Our gross margins in the Consumer group improved over 800 basis points versus Q3 of last year. These results signal the core strength of this Company to our customers, vendors and competitors.”
He continued, “Unfortuantely, the mobile side of our business is being hardest hit by the economic and auto crisis. Auto sales are at their lowest levels in over 26 years. There are no signs that this will change any time soon. We anticipated a slowdown, though not at these levels, and we continue to manage our inventory and reduce overhead expenses. We believe there could be an uptick in the second half of the year with the economic stimulus in place.”
He added, “Despite the decline in mobile sales, our margins have held steady. We believe that we are performing better than our competitors. Given our product and channel diversity and cash position, we will weather this storm and see long term growth opportunities.”
Audiovox recently announced partnership agreements with SIRIUS XM, Sony Playstation and Qualcomm’s Media FLO. During the conference call, Mr. Lavelle stated, “There are reasons that these industry giants have chsen us as their partner. We are a strong company with a great portfolio of respected brands. We can react quickly to market conditions and bring enough resources to any partnership. Our stability, financial strength and committment to this industry have been our hallmark for over 45 years.”
He continued about the agreements, “With this new agreement with SIRIUS XM, we will become the primary supplier of radio products in the aftermarket. We expect this agreement to more than double our sales in fiscal 2010. With this agreement, we have secured our position as the number one aftermarket supplier for the satellite market. In fiscal 2009, we expect to do about $50 million, and we expect over $100 million in 2010. These higher sales should allow us to better leverage our overhead structure and generate high gross profits.”
Mr. Lavelle added, “By adding Sony Playstation to our mobile entertainment system, we further differentiate ourselves from the competition. The financial impact of this deal will begin to materialize in Q3 of next year.”
He concluded, “While Q3 was positive, we are very cautious and focused on managing our overhead to operate lean and effectively. Continued weakness in the economy could negatively impact our Q4 performance, which is traditionally our weakest quarter. However, we believe that we have taken the necessary steps and made intelligent investments that will position us well as the market emerges from this recession. Our portfolio of brands is the strongest in our company’s history. We have more distribution than ever, and our retail presence continues to grow. We have a number of new products planned, some of which are industry firsts, which should help build our presence further. Most importantly, we are not dependent on financing. We have the financial resources to fund our operations and pursue attractive acqusitions.”
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