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Audiovox Corporation Reports Fiscal 2012 Second Quarter Results
Oct 11, 2011 (06:10 PM EDT)


- 2Q12 sales up 22.5% with the addition of Klipsch and OEM growth; gross margins up 650 basis points

- 2Q12 operating income of $7.7 million vs. $0.2 million in 2Q11

- 2Q12 EBITDA of $9.8 million vs. $3.6 million in 2Q11, a $6.2 million improvement

- Company on track to meet EBITDA forecast of $42 million

HAUPPAUGE, N.Y., Oct. 11, 2011 /PRNewswire/ -- Audiovox Corporation (NASDAQ: VOXX), today announced financial results for its fiscal 2012, second quarter and six months ended August 31, 2011.

Commenting on the Company's performance, Pat Lavelle, President and CEO stated, "Through the first half of the year, our business is primarily tracking to plan.  Our automotive OEM business continues to grow.  Our international operations are performing well, despite weakness in some European countries, and our Klipsch acquisition is meeting plan with a lot of potential to grow in the years ahead.  Additionally, car sales over the past few months have rebounded and all signs are pointing to continued strength.  Like most in our industry, we continue to be impacted by a slow retail environment and there are some concerns as we enter the all-important holiday season, as many retailers remain cautious in their buying.  However, given our performance year-to-date, the strength in our margins, and good management of our expenses and resources, we remain on track to meet our income and EBITDA forecasts for the year.  Equally important, we feel good about the next few years as we have a host of new and innovative products coming to market which should fuel growth for our Company, while we continue to generate cash, pay down our debt, and improve our balance sheet."

Net sales for the second quarter of fiscal 2012, were $158.3 million, an increase of 22.5% compared to net sales of $129.3 million reported in the comparable year ago period. For the six month period ended August 31, 2011, net sales were $323.7 million, an increase of 24.7% as compared to net sales of $259.6 million for the six month period ended August 31, 2010.

For the three and six month periods ended August 31, 2011, Electronics sales were $126.7 million and $259.0, an increase of 33.1% and 36.5%, respectively over the comparable prior year periods.  Accessories sales were $31.6 million and $64.7 million, a decrease of 7.2% and 7.5%, respectively.  For both periods, the Electronics Group was favorably impacted by the addition of Klipsch, improvements in the automotive OEM channel, both domestically and abroad, and increases in the Company's international operations, particularly in the automotive and accessories categories.  Offsetting these increases were lower sales of consumer electronics products and select groups in the audio category, as well as lower sales of accessory products attached to TV sales in the U.S.  As a percentage of net sales, Electronics represented 80% of the net sales for the three and six months ended August 31, 2011, and Accessories represented the remaining 20% for these periods.

The gross margin for the three months ended August 31, 2011 was 27.7%, an increase of 650 basis points as compared to 21.2% for the three months ended August 31, 2010.  For the comparable six month periods, the gross margin was 27.0% as compared to 21.0%.  Gross margins for both the three and six month periods were favorably impacted by the addition of high-end audio product lines, higher sales of OEM products, better margins in the Company's existing product lines, new product introductions, the Klipsch acquisition, and lower sales in our fulfillment business.  

Operating expenses increased by $8.9 million and $20.1 million for the three and six months ended August 31, 2011 to $36.2 million and $75.9 million, respectively, from $27.3 million and $55.8 million, respectively in the comparable prior year periods.  The increase in total operating expenses was due primarily to overhead from the Klipsch acquisition, which accounted for $9.6 million and $19.2 million during the three and six months ended August 31, 2011, respectively.  Core overhead, excluding the addition of expenses associated with Klipsch and acquisition-related costs, declined by $0.9 million and $0.6 million for the same periods noted above.  The Company continues to monitor its expense structure and identify synergies within its existing businesses.

The Company reported operating income of $7.7 million for the second quarter of fiscal 2012, compared to operating income of $0.2 million in the comparable year ago period.  For the six month period ended August 31, 2011, the Company reported operating income of $11.6 million as compared to an operating loss of $1.3 million for the period ended August 31, 2010, a $12.9 million improvement.

Net income for the three month period ended August 31, 2011 was $3.4 million or $0.15 per basic and diluted share as compared to net income of $0.6 million or earnings per basic and diluted share of $0.03 for the second quarter of fiscal 2011. For the six months ended August 31, 2011, net income was $5.9 million or $0.26 per share (basic) and $0.25 per share (diluted) as compared to net income of $1.8 million or earnings per basic and diluted share of $0.08 for the comparable six month period ended August 31, 2010.  Adjusted net income for the three month period ended August 31, 2011 was $3.7 million or $0.16 per diluted share compared to $1.1 million or $0.05 per diluted share for the comparable year ago period.  For the six month period ended August 31, 2011, adjusted net income was $7.1 million or $0.30 per diluted share compared to $1.9 million or $0.08 per diluted share for the comparable six month period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter of fiscal 2012, was $9.8 million as compared to EBITDA of $3.6 million for the comparable period in fiscal 2011.  Adjusted EBITDA for the same periods was $10.1 million and $4.0 million, respectively.  For the six month period ended August 31, 2011, EBITDA was $17.9 million and adjusted EBITDA was $19.9 million.  This compares to EBITDA of $6.6 million and adjusted EBITDA of $7.5 million for the period ended August 31, 2010.  Adjusted EBITDA for the three and six month period ended August 31, 2011 excludes stock-based compensation and Klipsch acquisition costs.

A reconciliation of GAAP net income to Adjusted EBITDA can be found in the Company's Form 10-Q for the period ended August 31, 2011.  

Non-GAAP Measures

Adjusted net income and adjusted EBITDA are not financial measures recognized by GAAP.  Adjusted net income represents net income, computed in accordance with GAAP, before stock-based compensation expense, a tax refund, and costs relating to the Klipsch acquisition.  Adjusted EBITDA represents net income, computed in accordance with GAAP, before interest expense, taxes, depreciation and amortization, stock-based compensation expense and costs relating to the Klipsch acquisition.  Depreciation, amortization, and stock-based compensation expense are non-cash items.  Adjusted net income per diluted share is calculated by dividing adjusted net income by diluted shares outstanding calculated in accordance with GAAP.

We present adjusted net income and related per diluted share amounts as well as adjusted EBITDA in this release because we consider them to be useful and appropriate supplemental measures of our performance.  Adjusted net income and related per diluted share amounts as well as adjusted EBITDA help us to evaluate our performance without the effects of certain GAAP calculations that may not have a direct cash impact on our current operating performance.  In addition, the exclusion of costs relating to the Klipsch acquisition and the tax refund allows for a more meaningful comparison of our results from period-to-period.  These non-GAAP measures, as we define them, are not necessarily comparable to similarly entitled measures of other companies and may not be appropriate measures for performance relative to other companies.  Adjusted net income and adjusted EBITDA should not be assessed in isolation from or construed as a substitute for net income prepared in accordance with GAAP.  Adjusted net income and adjusted EBITDA are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP.

Conference Call Information

The Company will be hosting its conference call on Wednesday, October 12, 2011 at 10:00 a.m. EDT.  Interested parties can participate by visiting www.audiovox.com, and clicking on the webcast in the Investor Relations section or via teleconference (toll-free number: 800-561-2693; international number: 617-614-3523; pass code: 23810307).  For those who will be unable to participate, a replay will be available approximately one hour after the call has been completed and will last for one week thereafter (replay number: 888-286-8010; international replay number: 617-801-6888; pass code: 34359752).

About Audiovox

Audiovox Corporation (NASDAQ: VOXX) is a leading, global supplier of mobile and consumer electronics products.  The Company is the number one high-end loudspeaker company in the world and is also a recognized leader in the marketing of automotive entertainment, vehicle security and remote-start systems.  Its extensive distribution network includes power retailers and 12-volt specialists as well the major Original Equipment Manufacturers ("OEMs"), both domestically and abroad.  The Company is also a recognized leader in the consumer electronics and accessories markets, selling to major retailers worldwide.  Audiovox possesses a strong brand portfolio and its products rank among the top ten in almost every category in which they sell.  Domestic brands include Audiovox®, Klipsch®, RCA®, Invision®, Jensen®, Omega®, Energizer®, Terk®, Acoustic Research®, Advent®, Code Alarm®, Prestige®, Excalibur® and SURFACE®. International brands include Klipsch®, Jamo®, Energy®, Mirage®, Mac Audio™, Magnat®, Heco®, Schwaiger®, Oehlbach® and Incaar™.

Headquartered in Hauppauge, NY, Audiovox has two manufacturing facilities in the United States, several domestic sales and marketing affiliates, and a robust international footprint with offices in Europe, Asia, Canada, Mexico and Venezuela.  For additional information, visit our Web site at www.audiovox.com.

Safe Harbor Statement

Except for historical information contained herein, statements made in this release that would constitute forward-looking statements may involve certain risks and uncertainties. All forward-looking statements made in this release are based on currently available information and the Company assumes no responsibility to update any such forward-looking statement. The following factors, among others, may cause actual results to differ materially from the results suggested in the forward-looking statements. The factors include, but are not limited to, risks that may result from changes in the Company's business operations; our ability to keep pace with technological advances; significant competition in the mobile and consumer electronics businesses as well as the wireless business; our relationships with key suppliers and customers; quality and consumer acceptance of newly introduced products; market volatility; non-availability of product; excess inventory; price and product competition; new product introductions; the possibility that the review of our prior filings by the SEC may result in changes to our financial statements; and the possibility that stockholders or regulatory authorities may initiate proceedings against Audiovox and/or our officers and directors as a result of any restatements. Risk factors associated with our business, including some of the facts set forth herein, are detailed in the Company's Form 10-K for the fiscal year ended February 28, 2011 on file with the Securities and Exchange Commission (SEC).

Company Contact:
Glenn Wiener
GW Communications
Tel: 212-786-6011 / Email: gwiener@GWCco.com

Audiovox Corporation and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share data)




August 31,
2011


February 28,
2011

Assets


(unaudited)



Current assets:





  Cash and cash equivalents


$

14,339



$

98,630


  Accounts receivable, net


117,703



108,048


  Inventory, net


151,137



113,620


  Receivables from vendors


6,746



8,382


  Prepaid expenses and other current assets


8,722



9,382


  Deferred income taxes


4,330



2,768


     Total current assets


302,977



340,830


Investment securities


13,086



13,500


Equity investments


13,939



12,764


Property, plant and equipment, net


24,017



19,563


Goodwill


88,373



7,373


Intangible assets, net


176,847



99,189


Deferred income taxes


12



6,244


Other assets


4,114



1,634


     Total assets


$

623,365



$

501,097





Audiovox Corporation and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share data)




August 31,
2011


February 28,
2011

Liabilities and Stockholders' Equity





Current liabilities:





  Accounts payable


$

54,008



$

27,341


  Accrued expenses and other current liabilities


43,750



36,500


  Income taxes payable


2,435



1,610


  Accrued sales incentives


17,876



11,981


  Deferred income taxes


417



399


  Current portion of long-term debt


3,498



4,471


     Total current liabilities


121,984



82,302


Long-term debt


55,349



5,895


Capital lease obligation


5,273



5,348


Deferred compensation


3,250



3,554


Other tax liabilities


1,788



1,788


Deferred tax liabilities


30,804



4,919


Other long-term liabilities


4,509



4,345


     Total liabilities


222,957



108,151


Commitments and contingencies





Stockholders' equity:





  Series preferred stock, $.01 par value; 1,500,000 shares authorized, no shares issued or outstanding





  Common stock:





     Class A, $.01 par value; 60,000,000 shares authorized, 22,630,837 shares issued and
     20,813,005 shares outstanding at August 31, 2011 and February 28, 2011


226



226


     Class B convertible, $.01 par value; 10,000,000 shares authorized, 2,260,954 shares
     issued and outstanding at August 31, 2011 and February 28, 2011


22



22


  Paid-in capital


278,272



277,896


  Retained earnings


142,953



137,027


  Accumulated other comprehensive (loss)


(2,689)



(3,849)


  Treasury stock, at cost, 1,817,832 shares of Class A common stock at August 31, 2011 and February 28, 2011


(18,376)



(18,376)


Total stockholders' equity


400,408



392,946


Total liabilities and stockholders' equity


$

623,365



$

501,097





Audiovox Corporation and Subsidiaries

Consolidated Statements of Operations

(In thousands, except share and per share data)

(unaudited)




Three Months Ended

August 31,


Six Months Ended

August 31,



2011


2010


2011


2010

Net sales


$

158,337



$

129,297



$

323,662



$

259,611


Cost of sales


114,475



101,827



236,112



205,079


Gross profit


43,862



27,470



87,550



54,532


Operating expenses:









  Selling


11,199



7,623



23,103



16,452


  General and administrative


20,765



16,032



43,418



33,362


  Engineering and technical support


4,007



3,640



7,818



6,029


  Acquisition-related costs


239





1,583




     Total operating expenses


36,210



27,295



75,922



55,843


Operating income (loss)


7,652



175



11,628



(1,311)


Other (expense) income:









  Interest and bank charges


(1,392)



(479)



(2,875)



(920)


  Equity in income of equity investees


890



840



2,019



1,748


  Other, net


(1,227)



498



(746)



1,998


     Total other (expense) income, net


(1,729)



859



(1,602)



2,826


Income before income taxes


5,923



1,034



10,026



1,515


Income tax expense (benefit)


2,484



389



4,101



(249)


Net income


$

3,439



$

645



$

5,925



$

1,764


Net income per common share (basic)


0.15



$

0.03



$

0.26



$

0.08


Net income per common share (diluted)


$

0.15



$

0.03



$

0.25



$

0.08


Weighted-average common shares outstanding (basic)


23,073,959



22,893,161



23,073,959



22,890,174


Weighted-average common shares outstanding (diluted)


23,254,296



23,043,136



23,268,241



23,037,640





Audiovox Corporation and Subsidiaries

GAAP Net Income to Adjusted Net Income

For the three and six months ended August 31, 2011


Reconciliation of GAAP to Adjusted Net Income Available to Common Shareholders




Three Months Ended August 31,


Six Months Ended August 31,



2011


2010


2011


2010










GAAP net income


$

3,439



$

645



$

5,925



$

1,764


Adjustments:









  Klipsch acquisition costs


239





1,583




  Stock-based compensation


126



428



376



856


  Discrete tax item








(750)


  Tax effects of above adjustments


(154)





(826)




Adjusted net income


$

3,650



$

1,073



$

7,058



$

1,870











GAAP net income per common share, diluted


$

0.15



$

0.03



$

0.25



$

0.08


Adjusted net income per common share, diluted


$

0.16



$

0.05



$

0.30



$

0.08











Diluted weighted average number of shares (GAAP and adjusted)


23,254



23,043



23,268



23,038





Reconciliation of GAAP Net Income to Adjusted EBITDA




Three Months Ended
August 31,


Six Months Ended
August 31,



2011


2010


2011


2010

Net income


$

3,439



$

645



$

5,925



$

1,764


Adjustments:









  Interest expense, net


1,392



479



2,875



920


  Depreciation and amortization


2,467



2,042



4,999



4,192


  Taxes


2,484



389



4,101



(249)


EBITDA


9,782



3,555



17,900



6,627


Stock-based compensation


126



428



376



856


Klipsch acquisition costs


239





1,583




Adjusted EBITDA


$

10,147



$

3,983



$

19,859



$

7,483





SOURCE Audiovox Corporation