SOURCE: Emerson Radio Corp.

August 14, 2014 16:45 ET

Emerson Radio Corp. Reports Fiscal 2015 First Quarter Results

HACKENSACK, NJ--(Marketwired - Aug 14, 2014) - Emerson Radio Corp. (NYSE MKT: MSN) today reported financial results for its first quarter ended June 30, 2014.

Net product sales for the first quarter of fiscal 2015 were $24.8 million, as compared to $23.5 million for the first quarter of fiscal 2014, an increase of $1.3 million, or 5.8%. The higher year-over-year net product sales were principally driven by a $1.9 million, or 8.5%, increase in net sales of houseware products, which was the result of higher year-over-year net sales of microwave ovens, partly offset by lower year-over-year net sales of compact refrigerators and wine coolers, and a $0.5 million, or 44.0% decline in net sales of audio products. Emerson continues to confront ongoing pricing pressures, intense competitive activity and a challenging retail environment, all of which are trends that management expects to continue.

Licensing revenue for the first quarter of fiscal 2015 was $1.1 million, as compared to $1.2 million in the first quarter of fiscal 2014, a decrease of $0.1 million, or 6.0%, principally due to lower year-over-year sales by the Company's licensees of branded products under license from the Company.

As a result of the foregoing factors, net revenues for the first quarter of fiscal 2015 were $25.9 million, an increase of $1.2 million, or 5.2%, as compared to first quarter fiscal 2014 net revenues of $24.7 million.

Operating income for the first quarter of fiscal 2015 was $0.8 million, a decrease of $0.5 million, or 40.5%, from operating income of $1.3 million for the first quarter of fiscal 2014 due to higher year-over-year cost of sales and other operating costs as a percentage of sales, and $0.2 million, or 10.9% in higher year-over year SG&A expenses. The higher SG&A expenses resulted primarily from advisory fees pertaining to work performed for the Special Committee of the Company's Board of Directors.

Net income for the first quarter of fiscal 2015 was $0.7 million as compared to $1.4 million for the first quarter of fiscal 2014, a decrease of $0.7 million, or 52.5%, due to the year-over-year decrease in operating income and lower year-over-year interest income. Diluted earnings per share for the first quarter of fiscal year 2015 were $0.02, as compared to $0.05 for the first quarter of fiscal year 2014, a decrease of $0.03 per diluted share, or 60.0%. 

Duncan Hon, Chief Executive Officer of Emerson Radio, commented, "Our first quarter fiscal 2015 net income declined significantly as compared to the prior year due primarily to lower margins on our product sales, driven by intense competition, including downward pricing pressure, within all of our product categories. We expect these factors to affect our year-over-year comparisons throughout the remainder of fiscal 2015. The Company continues to seek to implement pricing, product strategy initiatives and licensing opportunities to improve the Company's results of operations, although there can be no assurance that such initiatives will be successfully implemented or have the desired effects on the Company's results of operations and financial condition."

About Emerson Radio Corp.
Emerson Radio Corp. (NYSE MKT: MSN), incorporated in 1994, is headquartered in Hackensack, N.J. The Company designs, sources, imports and markets a variety of houseware and consumer electronic products, and licenses its trademarks to others on a worldwide basis for a variety of products. For more information, please visit Emerson Radio's web site at www.emersonradio.com.

Forward Looking Statements
This release contains "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current knowledge, assumptions, judgment and expectations regarding future performance or events. Although management believes that the expectations reflected in such statements are reasonable, they give no assurance that such expectations will prove to be correct and you should be aware that actual results could differ materially from those contained in the forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, including the risk factors detailed in the Company's reports as filed with the Securities and Exchange Commission. The Company assumes no obligation to update the information contained in this news release.

EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except earnings per share data)
   
  Three Months Ended
  June 30,
  2014   2013
           
Net revenues:          
Net product sales   24,842     23,481
Licensing revenue   1,101     1,171
Net revenues $ 25,943   $ 24,652
           
Costs and expenses:          
Cost of sales   22,409     20,984
Other operating costs and expenses   317     151
Selling, general and administrative expenses   2,426     2,188
    25,152     23,323
Operating income   791     1,329
           
Other income:          
Interest income, net   65     222
           
Income before income taxes   856     1,551
Provision for income taxes   205     182
Net income $ 651   $ 1,369
           
           
Basic net income per share:   0.02     0.05
           
Diluted net income per share:   0.02     0.05
           
Weighted average shares outstanding:          
  Basic   27,130     27,130
  Diluted   27,130     27,130
             
             
   
EMERSON RADIO CORP. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(Unaudited)  
(In thousands except share data)  
           
           
  6/30/14     3/31/14  
               
  ASSETS              
Current Assets:              
Cash and cash equivalents $ 47,874     $ 26,328  
Restricted cash   73       --  
Short term investments   --       32,194  
Trade accounts receivable, net   16,839       4,354  
Royalties and other receivables   1,068       3,865  
Inventory, net   8,930       5,438  
Prepaid purchases   1,321       2,047  
Prepaid expenses and other current assets   1,294       1,604  
Deferred tax assets   1,064       1,394  
               
  Total Current Assets   78,463       77,224  
Property, plant, and equipment, net   134       142  
Deferred tax assets   1,934       1,753  
Other assets   120       130  
               
  Total Non-current Assets   2,188       2,025  
               
  Total Assets $ 80,651     $ 79,249  
               
    LIABILITIES AND SHAREHOLDERS' EQUITY              
Current Liabilities:              
Accounts payable and other current liabilities   4,702       3,951  
               
  Total Current Liabilities   4,702       3,951  
  Total Non-current Liabilities   --       --  
               
  Total Liabilities   4,702       3,951  
Shareholders' Equity:              
Preferred shares -- 10,000,000 shares authorized; 3,677 shares issued and outstanding; liquidation preference of $3,677,000   3,310       3,310  
Common shares -- $0.01 par value, 75,000,000 shares authorized; 52,965,797 shares issued and 27,129,832 shares outstanding at June 30, 2014 and March 31, 2014, respectively   529       529  
Additional paid-in capital   98,785       98,785  
Accumulated deficit   (2,451 )     (3,102 )
Treasury stock, at cost, 25,835,965 shares   (24,224 )     (24,224 )
               
  Total Shareholders' Equity   75,949       75,298  
               
  Total Liabilities and Shareholders' Equity $ 80,651     $ 79,249  
               

Contact Information

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    Barry Smith
    Investor Relations Manager
    (973) 428-2004