Audiovox (VOXX) Q3 2012 Earnings Call January 10, 2012 10:00 am ET Executives John J. Shalam - Chairman of the Board Glenn Wiener - Patrick M. Lavelle - Chief Executive Officer, President and Director Charles Michael Stoehr - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Director Analysts Matthew Spratford - Sidoti & Company, LLC R. Scott Tilghman - Caris & Company, Inc., Research Division Presentation Operator
We released our results after market closed yesterday. If anybody needs a copy, please feel free to call my office. Additionally, it can be downloaded on our website in the Investor Relations section, as can our Form 10-Q, which was also filed after market. We're very excited to be speaking with you today, and at this time, I'd like to turn the call over to Pat.Patrick M. Lavelle Thanks, Glenn, and good morning, everyone. I'd like to begin by wishing you a healthy and happy new year and all the best in 2012. As Glenn indicated, we're here at the Consumer Electronics Show in Las Vegas where yesterday we released over 30 new product announcements. We are looking forward to the potential 2012 brings for VOXX International and our shareholders. Our fiscal Q3 sales were nearly $44 million or 26.7% higher than Q3 2011, driven by 3 factors: the addition of Klipsch, continued growth in our mobile OEM business and strength in our international markets. While the holiday season was better than, I believe, most anticipated, consumer spending for electronic products, excluding smartphones, tablets and related accessories, was still hampered by a weak domestic economy. Our margins increased with the shift in our product mix to more mobile products, high-end audio systems and accessories, both domestically and internationally. Gross margins were 28.9%, up 770 basis points over the third quarter last year. For the 9-month period, our gross margins were 27.8%, 670 basis points higher than last year and ahead of our initial plan. Based on our expectations for the fourth quarter, I am comfortable with revising our prior guidance of 25% for the fiscal year, upwards to approximately 27%. We posted an operating profit of $18.4 million versus $5.4 million in last year's third quarter, and for the 9-month period, operating profit was $30.1 million, a $26 million improvement over last year. Earnings per share for the third quarter were $0.38 versus $0.17 last year, and for the comparable 9-month period, we've reported $0.64 in fiscal '12 versus $0.24 in fiscal '11. Adjusted EBITDA was $19.1 million, up almost $11 million, and for the 9-month period, we reported adjusted EBITDA of $39.4 million, which is over a $23 million increase.
With the all-important holiday season behind us, we're in a better position to estimate our results for the fiscal year. We expect sales to come in lower than prior guidance and be just north of $700 million. Holiday sales, although better than last year, did not materialize as planned, primarily because we chose to pass on a number of programs that would have required deep discounting. As I've indicated in the past, our focus is on profitability and therefore, we chose not to sacrifice margin for top line revenue. With that said, as a result of the shift to higher products and the expense controls we have in place, we believe we'll exceed our prior EBITDA guidance of $42 million and come closer to EBITDA of approximately $44 million in fiscal 2012. We remain highly focused on the bottom line and increasing shareholder value.Now, I'd like to spend a few minutes touching on some of the key drivers so far this year and highlight some of the products we are introducing here at CES. In Consumer Electronics, year-to-date, our high-end speaker sales and margins have been tracking to plan, and more importantly, our new products are being met with positive response. The Klipsch S4i and S4a in-ear headphones, the Mode noise canceling headphone, our high-end home entertainment audio systems and the Gallery G17 Air, the first product Klipsch introduced for Apple's AirPlay were all key drivers in Q3. At CES, Klipsch is launching 3 new Apple AirPlay-enabled audio solutions, the Klipsch Room Groove, the Klipsch Stadium and the Klipsch Console. All of these systems seamlessly stream high-quality audio directly from any iPod Touch, iPhone or iPad wirelessly, as well as from a Mac or PC. They're fantastic offerings based on years of design and deliver quality to the consumer that really is unrivaled. We also have plans to introduce new high-end speaker systems under Magnat, Echo and Klipsch this year, and have a revamped lineup under Jamo ready to go, which should make international sales a bigger part of the VOXX story. We're looking forward to a strong finish to the year for this group and believe we've made inroads for continued growth next year. Read the rest of this transcript for free on seekingalpha.com