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Navarre Reports Strong Fiscal Third Quarter 2013 Results

Stocks in this article: NAVR

Management Commentary

"The momentum we created in the first half of our fiscal year has continued in the third quarter," said Richard Willis, president and CEO of Navarre. "We realized strong results in all three of our targeted organic growth initiatives, e-commerce sales channel, CE&A and Canada, which had double-digit organic growth of 72%, 45% and 31%, respectively.

"The integration of SpeedFC rounds out our end-to-end retail distribution and e-commerce services platform. Our two new strategically located distribution and fulfillment facilities allow us to efficiently deliver products to customers and consumers while reducing costs and ensuring a high level of service. We are making strategic investments in these facilities where we see opportunities for significant costs savings, such as creating a highly automated facility in Columbus. We estimate investments like these could increase our throughput by up to five times what it is today, while increasing accuracy and delivery timeliness.

"Our team has executed upon all of the major strategic initiatives we identified roughly fifteen months ago," concluded Willis. "This gives us great confidence that our overall growth strategy is well on track. In future quarters, we will continue to focus on driving organic growth in our retail distribution business, aggressively grow our e-commerce and fulfillment business by leveraging our SpeedFC assets, and work diligently to take out costs."

Outlook for Fiscal 2013 and 2014

The company's guidance for fiscal 2013, which was updated on November 20, 2012, remains on target, with net sales expected between $480 million and $500 million, and adjusted EBITDA expected between $9.0 and $11.0 million. While SpeedFC will contribute revenue to the remainder of Navarre's fiscal year, its adjusted EBITDA is seasonal and a large portion was generated prior to its acquisition.

During fiscal year 2014, Navarre will have the benefit of consolidating SpeedFC's peak season financial results. The company continues to anticipate that net sales for fiscal year 2014 will be between $530 and $560 million, and adjusted EBITDA of between $17 million and $21 million.

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