This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Skullcandy Management Discusses Q2 2012 Results - Earnings Call Transcript

With that, I'll turn the call over to Skullcandy's President and CEO, Jeremy Andrus.

Jeremy Andrus

Hi, everyone, and thanks for joining our second quarter earnings call. We are pleased with our second quarter results. Net sales increased 38%. Gross margin improved sequentially and net income increased 60%. Our sales growth was broad-based, with all of our major channels of distribution increasing on both the domestic and international sides. Sales growth was driven by sell-through and SKU growth with existing accounts, a double-digit increase in ASPs and the transition to a direct selling model in Europe. Also benefiting sales was the earlier timing of back-to-school shipping, which began about a week earlier this year and shifted some sales in the second quarter compared to the third quarter last year.

Second quarter gross margin increased 40 basis points sequentially from the first quarter and benefited, primarily by a more favorable mix of revenue and improved margins from 2012 model products. In the expense side, SG&A increased slightly above sales growth and were aligned with expectations. While we continue to invest in key areas of the business, the rate of investment has slowed and we are beginning to generate incremental revenue from those investments.

We're extremely excited about the second half of this year. We will be launching a new redesigned line of Astro Gaming headphones, a new line of Skullcandy gaming headphones and a number of internally designed and developed headphones from both our Skullcandy and 2XL brands. We believe Astro Gaming is the best premium gaming headphone brand on the market and there are many long-term opportunities to continue to develop this brand. When we acquired Astro in April of last year, we knew there were significant number of synergies between gaming and audio headphone categories. These synergies includes product development, supply-chain, sales channels and the customer base. The gaming headphone category is growing, especially at the high-end and there are limited number of established brands in this space. Barriers to entry are high because of the sophistication in technology involved with developing and distributing such a complex product. At the time of acquisition, Astro was a small niche business with great products and a strong brand, but have limited distribution and a cost structure that did not support traditional retail channels. The company's products were targeted primarily at hard-core gamers and sold exclusively online.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs