Audiovox Corporation (VOXX)
F1Q11 (Qtr End 05/31/10) Earnings Call
July 13, 2010 10:00 a.m. ET
Glenn Wiener - IR
Patrick Lavelle - President & CEO
Michael Stoehr - SVP & CFO
Thomas Kahn - Kahn Brothers
Jim Barrett - CL King
Previous Statements by VOXX
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Good day, ladies and gentlemen, and welcome to the First Quarter 2011 Audiovox Corporation Earnings Conference Call. My name is Ann and I will be your coordinator for today's call. As a reminder, this conference is being recorded for replay purposes. At this time, all participants are in listen-only mode. (Operator Instructions). We will be facilitating a question and answer session following the presentation. (Operator Instructions). I would now like to turn the presentation over to your host for today's call, Mr. Glenn Wiener, Investor Relations. Please proceed, sir.
Thank you Ann and welcome to Audiovox's Fiscal 2011 First Quarter Results Conference Call. As you know, today's call is being webcast on our website, www.audiovox.com, and can be accessed in the Investor Relations section. With us today are Patrick Lavelle, President and CEO and Michael Stoehr, Senior Vice President and Chief Financial Officer.
Before we begin, I'd quickly like to remind everyone that except for historical information contained herein, statements made on today's call and webcast that would constitute forward-looking statements may involve certain risks and uncertainties. All forward-looking statements made are based on currently available information, and the company assumes no responsibility to update any such forward-looking statements. Risk factors associated with our business are detailed in our Form 10-K for the fiscal year ended February 28, 2010.
Our press release can be viewed on our website as can the live webcast of our conference call. At this time, I would like to turn the call over to Patrick Lavelle. Pat?
Thanks Glenn and good morning everyone. Yesterday we reported first quarter results after the market closed. Our sales were up close to 9%, our gross margins increased 1.7% coming in at 20.8% and we posted a profit of $1.1 million and earnings per share of $0.05 compared to a profit last year of approximately 500,000 or $0.02 a share.
Mobile and electronic sales were up 47% with 26% of that increase attributed to the new OE business from our acquisition of Invision and 21% a result of increases in our core mobile and security categories.
International sales were up 36% largely due to the Schwaiger acquisition and we are able to post this increase despite a 12% decline on foreign currency exchange rates driven by the weakening euro.
All of these positive results offset lower sales in our consumer and accessory groups which were down 18.4%.
While we showed improvement over the last year’s first quarter like most companies, we are still feeling the affects of an economic recovery that is materializing slower than I think anyone has expected. As I have stated on the last call we believe Audiovox is well positioned to be profitable, though our profits will be dependent not only on the domestic recovery but also on the state of the global markets and the corresponding impact to our top-line. Long-term, we remain very positive about our prospects. During the first quarter we had several product lines experience good growth, excluding the addition Invision which resulted in significantly higher OE sales.
Our mobile group was up compared to last year. This was driven by higher after market sales in our core security and mobile video along with new sales from FLO TV and additional security sales from the Omega distribution agreement.
We are encouraged by the positive signs pointing to a continuing automotive market recovery. While car sales are still well below levels of years past, they are improving month-to-month and year-over-year. Many of the OEs are reporting growth and May numbers came in 19% over the last year.
JDPower’s estimates that car sales are tracking to a 11.3 million for the year up from April's estimates of 11.2 million and on an annualized basis are tracking closer to 11.7 million. While by no means is the automotive industry in a robust growth pattern since sales are still significantly below pre-recession numbers, it appears that sales have stabilized, and reports on 2Q and 3Q output look promising.
I am happy to report we began our first shipments of rear-seat entertainment for the Ford Expedition and Lincoln Navigator in August. We have begun to deliver the BMW X1 and have been advised that we are now through to the BMW X3 which sales are anticipated for the latter part of the fiscal year. In addition, we expect to benefit from new promotions at Chrysler on FLO TV and GM on rear-seat entertainment. We believe there is significant opportunity for Audiovox to share in the growth and recovery of the automotive industry through our existing business relationships as well as through the expanded OE reach that the Invision acquisition has provided.
In the aftermarket, FLO TV continues to be a major focus of our mobile products. This quarter, Best Buy will begin selling the FLO TV automotive system as well as the first portable DVD with FLO TV built in. We've also started shipping several FLO ready systems in our mobile video and Jensen lines that allow FLO TV to be controlled directly by the video system. Sales of the FLO TV handheld were up in the quarter and we continue to expand distribution. And finally, we are gearing up for the remote start selling season with three distinct lines from Prestige, Code Alarm and now Omega that cover virtually every distribution channel.