TEMPE, AZ--(Marketwire - Apr 28, 2011) - Rockford Corporation (PINKSHEETS: ROFO) today
announced financial results for the three months ended March 31, 2011.
Net income for the three months ended March 31, 2011 was $1.3 million,
compared to net income of $0.6 million for the same period in 2010.
Net sales for the three months ended March 31, 2011, increased 24.1% to
$16.6 million compared to net sales of $13.4 million for the same period in
2010. The increase in net sales for the three month period was primarily
due to increases in Rockford's core aftermarket, international and OEM
sales channels. OEM royalty revenue for the three months ended March 31,
2011, was $0.8 million compared to $0.7 million for the same period in
2010.
As a percent of net sales, gross margin for the three months ended March
31, 2011 increased to 39.7% compared to 37.3% for the same period in 2010.
The increase in gross margin percentage was primarily due to lower returns
and discounts as a percentage of sales and higher overall sales and OEM
royalty revenue.
Operating expenses for the three months ended March 31, 2011, were higher
at $5.3 million compared to $4.3 million for the same period in 2010. The
increase in operating expenses for the three month period compared to the
prior year was primarily due to higher variable expenses, such as outbound
freight and commissions, due to higher sales volume and increased sales and
promotional expenditures.
William R. Jackson, Rockford's Chief Executive Officer and President,
commented, "We are pleased with our start to 2011. Our overall net sales
were up over 20% when compared to the same period in 2010. Each of our
business segments contributed to the gain. Our gross margins improved over
2% compared to the same period in 2010 and operating expenses are tracking
to plan. The car audio market is showing some signs of recovery. Many
dealers are reporting better traffic patterns and sell through of products.
Considering the weather's impact on many parts of the US in the first
quarter, we are pleased with the performance from our specialist channel.
All of our brands showed nice growth when compared to the first quarter of
2010. Our OEM business continues to improve as the retail automobile
market rebounds."
Mr. Jackson continued: "The disaster in Japan has had some indirect impact
on our business. Our Japanese aftermarket distributor lost a portion of his
dealer base due to the tragedy. In addition, we are seeing some slowing in
raw material and component parts delivery to our supply base. The
disruptions in auto manufacturing resulting from the tragedy may also
impact our OEM sales in the short term. We are monitoring the situation
closely."
Mr. Jackson observed: "During the first week of January 2011, we launched
approximately 100 new products at the Palms Hotel in Las Vegas. Most of
these products began shipping in the first quarter and the response has
been excellent. Our new Punch BRT micro amplifiers and Punch Subwoofers are
getting rave reviews from the field. Almost all of our remaining new
products for 2011 will be shipping during the second quarter."
Mr. Jackson noted: "We are working closely with our retailers to drive
excitement and customers to their stores. In March 2011, we launched our
'Street Team.' The Street Team is responsible for traveling the
marketplace and helping retailers promote and use our SoundLab
demonstration vehicles. Initial dealer feedback has been great. The
SoundLab allows retailers to promote selling and educational events and
showcase the Rockford Fosgate experience. In addition, we launched a
sponsorship program with the Monster Energy AMA Supercross tour. The
Supercross events target our core demographic and give us a great
opportunity to showcase our brand and products."
Mr. Jackson concluded: "The first quarter represented significant
improvement over 2010. We are being cautious given the potential impact of
rising fuel prices and continued supply chain and currency challenges.
However, we are cautiously optimistic about the future."
Liquidity and Capital Resources
Rockford's cash used by operations was $1.4 million for the three month
period ended March 31, 2011 as compared to $0.4 million during the
comparable period in 2010. Net income of $1.3 million was the primary
source of cash from operations and an increase in accounts receivables of
$4.9 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 and prime rates are available to Rockford. The LIBOR and prime
interest rate options were approximately 2.26% and 3.25%, respectively, at
March 31, 2011. As of March 31, 2011, Rockford was in compliance with all
applicable covenants. Availability under the credit facility at March 31,
2011 was approximately $7.0 million in excess of the outstanding balance of
$3.0 million. Other than ordinary course financing of trade payables, the
Wells Fargo credit facility is Rockford's only significant bank financing
arrangement.
Rockford anticipates, based on its operating plans and cash flow forecast,
that cash flow from operations for 2011 and 2012, and available borrowings
under its credit facility, will be adequate to meet Rockford's requirements
for current capital expenditures, working capital, interest payments and
stock repurchases, if any, for the next twelve months.
Stock Buyback Program
Rockford previously announced that its Board of Directors approved a
program to purchase up to 870,000 shares, or approximately 10%, of
Rockford's Common Stock in the open market or through privately negotiated
transactions. To date Rockford has repurchased approximately 347,000
shares under this stock buyback program. Rockford has approximately 8.4
million shares outstanding currently. The program will expire on December
31, 2012, but may be suspended or discontinued at any time.
About Rockford Corporation
Setting the standard for excellence in the mobile audio industry, 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/ir/financialinfo.asp in a document 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 Months Ended March 31, 2011 and 2010
($000s omitted except per share amounts)
Three months ended
March 31,
-----------------
2011 2010
-------- --------
Net sales $ 16,570 $ 13,357
Cost of goods sold 9,995 8,375
-------- --------
Gross profit 6,575 4,982
Operating expenses:
Sales and marketing 2,810 2,006
General and administrative 1,954 1,829
Research and development 503 464
-------- --------
Total operating expenses 5,267 4,299
-------- --------
Operating income 1,308 683
Interest and other expense, net 8 61
-------- --------
Income before income taxes 1,300 622
Income tax benefit - -
-------- --------
Net income $ 1,300 $ 622
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Net income per common share:
Basic $ 0.15 $ 0.07
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Diluted $ 0.14 $ 0.07
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Weighted average shares:
Basic 8,727 8,607
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Diluted 9,483 8,607
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Rockford Corporation
Condensed Consolidated Balance Sheets (unaudited)
At March 31, 2011 and December 31, 2010
(In thousands)
March 31, December 31,
2011 2010
----------- -----------
ASSETS
Current assets:
Cash $ -- $ --
Accounts receivable, net 13,504 8,684
Inventories 5,502 5,818
Prepaid expenses and other current assets 486 547
----------- -----------
Total current assets 19,492 15,049
Property and equipment, net 1,477 1,525
Other assets 249 262
----------- -----------
Total assets $ 21,218 $ 16,836
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 5,053 $ 4,262
Accrued salaries and incentives 1,021 785
Accrued warranty and returns 642 546
Accrued customer programs 698 651
Other accrued liabilities 1,750 1,403
Asset based credit facility 3,029 1,509
----------- -----------
Total current liabilities 12,193 9,156
Other long-term liabilities 82 109
----------- -----------
Total liabilities 12,275 9,265
Shareholders' equity:
Common stock 96 96
Additional paid-in-capital 38,939 38,867
Retained deficit (28,781) (30,081)
Treasury stock (1,311) (1,311)
----------- -----------
Total shareholders' equity 8,943 7,571
----------- -----------
Total liabilities and shareholders' equity $ 21,218 $ 16,836
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