SOURCE: Rockford Corporation

April 02, 2012 05:00 ET

Rockford Corporation Reports 2011 Results; Provides Earnings Guidance for First Quarter 2012

TEMPE, AZ--(Marketwire - Apr 2, 2012) - Rockford Corporation (PINKSHEETS: ROFO) today announced financial results for the three and twelve months ended December 31, 2011.

Net income for the three months ended December 31, 2011 was $1.1 million, compared to $0.2 million for the same period in 2010. Net income for the year ended December 31, 2011 was $5.3 million, compared to $2.7 million for the same period in 2010.

Net sales for the three months ended December 31, 2011, increased 11.9% to $13.0 million compared to net sales of $11.7 million for the same period in 2010. Net sales for the year ended December 31, 2011, increased 12.2% to $60.8 million compared to net sales of $54.2 million for the same period in 2010. The increase in net sales for the three and twelve month period was primarily due to increases in Rockford's core aftermarket and international sales channels. OEM royalty revenue for the year ended December 31, 2011, was $2.7 million compared to $2.9 million for the same period in 2010.

As a percent of net sales, gross margin for the three months ended December 31, 2011 increased to 39.9% compared to 36.4% for the same period in 2010. As a percent of net sales, gross margin for the year ended December 31, 2011 increased to 38.8% compared to 36.8% for the same period in 2010. The increase in gross margin percentage was primarily due to lower product returns and freight costs as a percent of sales.

Operating expenses for the three months ended December 31, 2011, were relatively flat at $4.2 million compared to $4.1 million for the same period in 2010. Operating expenses for the year ended December 31, 2011, increased 6.6% to $18.3 million compared to $17.2 million for the same period in 2010. The increase in operating expenses for the year compared to the prior year was primarily due to higher sales and marketing expenses.

William R. Jackson, Rockford's Chief Executive Officer and President, commented, "We are pleased with our 4th quarter and full year results for 2011. The overall car audio market was challenging in 2011. However, our brand portfolio performed quite well and we were able to show growth in all of our distribution channels. The entire team at Rockford did a terrific job in 2011."

Mr. Jackson observed: "The strength of the Rockford Fosgate brand and product mix continues to grow. In 2011 we launched several key new products that focused on better vehicle integration and increased applications. The market response to these products has been excellent. The new Punch BRT amplifiers have allowed consumers to install better performing audio into motorcycles, ATVs, compact cars and marine applications. In addition, the new line of Punch Subwoofers has re-set the bar for high performance bass response. Throughout 2011 we focused on working with our dealers to increase our brand presence and drive consumers to retail stores. Our Soundlab promotional vehicles traveled the United States exposing consumers and audio enthusiasts to the Rockford Fosgate experience."

Mr. Jackson stated: "Our other brands, Renegade, Lightning Audio, BRAX and Helix continued to grow throughout 2011. We were able to add a significant number of new dealers and reach new customers."

Mr. Jackson noted: "In January 2012, we exhibited our new product offerings at the Palms Hotel in Las Vegas at the time of the International Consumer Electronics Show. This introduction included over 80 new products. The dealer and international distributor attendance was improved over 2011. Many of our retailers and distributors were optimistic about 2012 and very excited about our new products. Over 90% of all our new products are shipping and have been well received in the marketplace."

Mr. Jackson commented: "We have several new marketing campaigns in play for 2012. I am pleased to announce that Rockford Fosgate will be the exclusive car audio sponsor for the 2012 Van's Warped Concert Tour. This is a 41 city concert tour visiting the US and Canada. The tour kicks off June 16th and ends August 5th. Our Rockford Fosgate Soundlab vehicle will be traveling with the tour and available for demonstration at all of the events. In addition, we have several new endorsement and sponsorship programs launching, including the Hart and Huntington Supercross team, Ryan Sipes - professional Supercross racer, Cameron Dollar - MMA fighter, Paul Tracy - race car driver, Casey Currie - Lucas Oil off road racer and Andrew Pierce - amateur motocross champion."

Mr. Jackson continued: "On March 28th, Rockford became the exclusive mobile electronics distributor for Sanctiond Car Care products. Sanctiond is a brand developed by legendary artist and tattoo icon 'Mister Cartoon.' The brand targets the urban consumer and features proprietary packaging and formulas. We are excited about the opportunity. The Sanctiond brand aligns perfectly with Rockford and offers our retailers an opportunity to expand into a new category. The Sanctiond brand will only be available at select specialist auto parts stores and Rockford Fosgate dealers."

Mr. Jackson concluded: "In summary, we feel good about our 2011 performance. We continue to be cautiously optimistic about the future and committed to growing our brands with our partners."

Liquidity and Capital Resources

Rockford's cash provided by operations was $5.8 million for the year ended December 31, 2011 as compared to $3.4 million during the comparable period in 2010. Net income of $5.3 million was the primary source of cash from operations and an increase in inventory of $2.5 million was the primary use of cash from operations.

Rockford's asset-based credit facility with Wells Fargo Capital Financial continues to have the terms described in Rockford's annual report for the year ended December 31, 2010. Under the agreement, pricing options based on LIBOR rates are available to Rockford. The interest rate was approximately 4.6% at December 31, 2011. As of December 31, 2011, Rockford was in compliance with all applicable covenants. Availability under the credit facility at December 31, 2011 was approximately $8.7 million. Rockford had no borrowings under the facility as of December 31, 2011.

Rockford anticipates, based on its operating plans and cash flow forecast, that cash flow from operations for 2012 and 2013, and available borrowings under its credit facility, will be adequate to meet Rockford's requirements for current capital expenditures, working capital and interest payments for the next twelve months.

First Quarter 2012 Earning Guidance

Rockford also announced it expects to report increased profits and revenues for the three months ended March 31, 2012 compared to the same period in 2011. Revenues are expected to be in the range of approximately $20.5 million to $21.5 million for the first quarter of 2012, an increase of approximately 24% to 30% compared to revenues of $16.6 million in the first quarter of 2011. Net income is expected to increase by a significantly larger percentage than the increase in revenues.

Stock Buyback Program

Rockford announced on January 25, 2012, that its Board of Directors approved a program to purchase up to 765,000 shares, or approximately 10%, of Rockford's Common Stock in the open market or through privately negotiated transactions. From January 25, 2012, to date Rockford has repurchased approximately 146,000 shares under this stock buyback program. After these repurchases Rockford has approximately 7.5 million shares outstanding. The program will expire on March 31, 2013, but may be suspended or discontinued at any time.

About Rockford Corporation

Setting the standard for excellence in the audio industry, the Rockford Corporation markets and distributes high-performance audio systems for the mobile audio aftermarket and OEM market. Headquartered in Tempe, Arizona, Rockford Corporation distributes its products under six brands: Rockford Fosgate®, Rockford Acoustic Design®, Lightning Audio®, Brax™, Helix™ and Renegade®. For more information, please visit: www.rockfordfosgate.com, www.rockfordacousticdesign.com, www.lightningaudio.com, www.braxhifi.com, www.helixhifi.com and www.renegadecaraudio.com.

Forward-looking Statement Disclosure

We make forward-looking statements in this press release including but not limited to statements about our results of operations. These statements may be identified by the use of forward-looking terminology such as "may," "will," "believe," "expect," "anticipate," "estimate," "continue," or other similar words.

Forward-looking statements are subject to many risks and uncertainties. Rockford cautions you not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Actual results may differ materially from those anticipated in our forward-looking statements. Rockford disclaims any obligation or undertaking to update these forward-looking statements to reflect changes in our expectations or changes in events, conditions, or circumstances on which our expectations are based.

When considering our forward-looking statements, you should keep in mind the risk factors discussed in our press releases and earnings reports, as well as the risk factors generally applicable to a small business such as ours. We particularly call your attention to the risk factors and other cautionary statements identified on our investor relations web-site, http://www.rockfordcorp.com/RiskFactors titled "Risk Factors That May Affect Rockford's Operating Results, Business Prospects and Stock Price" (the "Risk Disclosure"). We updated the Risk Disclosure as of March 31, 2011. Our business is subject to the risk factors noted in the Risk Disclosure, other risk factors identified above and other risk factors we have not anticipated or discussed. These risk factors could cause our actual results to differ significantly from those anticipated in our forward-looking statements.

Rockford Corporation
Condensed Consolidated Statements of Operations (unaudited)
For the Three and Twelve Months Ended December 31, 2011 and 2010
($000s omitted except per share amounts)
Three months ended
December 31,
Twelve months ended
December 31,
2011 2010 2011 2010
Net sales $ 13,039 $ 11,658 $ 60,847 $ 54,231
Cost of goods sold 7,830 7,414 37,221 34,251
Gross profit 5,209 4,244 23,626 19,980
Operating expenses:
Sales and marketing 1,989 1,906 9,427 7,972
General and administrative 1,669 1,687 6,913 7,196
Research and development 510 489 1,956 1,993
Total operating expenses 4,168 4,082 18,296 17,161
Operating income 1,041 162 5,330 2,819
Interest and other expense, net - 26 77 177
Income before income taxes 1,041 136 5,253 2,642
Income tax benefit (68 ) (71 ) (68 ) (71 )
Net income $ 1,109 $ 207 $ 5,321 $ 2,713
Net income per common share:
Basic $ 0.14 $ 0.02 $ 0.64 $ 0.32
Diluted $ 0.12 $ 0.02 $ 0.58 $ 0.30
Weighted average shares:
Basic 8,071 8,627 8,351 8,593
Diluted 8,968 9,366 9,230 9,170

Rockford Corporation
Condensed Consolidated Balance Sheets (unaudited)
At December 31, 2011 and 2010
(In thousands)
December 31, December 31,
2011 2010
ASSETS
Current assets:
Cash $ 1,762 $ --
Accounts receivable, net 9,659 8,684
Inventories 8,031 5,818
Prepaid expenses and other current assets 473 547
Total current assets 19,925 15,049
Property and equipment, net 1,370 1,525
Other assets 220 262
Total assets $ 21,515 $ 16,836
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 6,800 $ 4,262
Accrued salaries and incentives 921 785
Accrued warranty and returns 450 546
Accrued customer programs 644 651
Other accrued liabilities 1,549 1,403
Asset based credit facility -- 1,509
Total current liabilities 10,364 9,156
Other long-term liabilities 26 109
Total liabilities 10,390 9,265
Shareholders' equity:
Common stock 96 96
Additional paid-in-capital 39,038 38,867
Retained deficit (24,760 ) (30,081 )
Treasury stock (3,249 ) (1,311 )
Total shareholders' equity 11,125 7,571
Total liabilities and shareholders' equity $ 21,515 $ 16,836

Contact Information

  • Executive Contact:
    Richard Vasek
    Chief Financial Officer
    Rockford Corporation
    (480) 517-3169