Cobra Electronics Corporation : Cobra Electronics Reports Increased Third Quarter Results
11/08/2011| 08:06am US/Eastern
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CHICAGO, Nov. 8, 2011 /PRNewswire/ -- Cobra Electronics Corporation (NASDAQ: COBR), a leading global designer and marketer of mobile communications and navigation products, today reported net income of $1.4 million, or $0.21 per share for the third quarter of 2011 as compared to a net income of $799,000, or $0.12 per share for the third quarter of 2010. In addition, operating income increased to $2.3 million for the current quarter from $522,000 in the same quarter last year. This significant improvement reflected an increase in net sales to $34.5 million from $28.9 million and an increase in gross margin to 29.9 percent from 25.5 percent in the prior period.
Consolidated net sales increased by $5.5 million, or 19.2 percent, with the Cobra segment reporting an increase in net sales of $5.7 million, or 22.8 percent, and the Performance Products Limited ("PPL") segment reporting a decrease of $184,000, or 4.9 percent. The sales increase for the Cobra segment resulted from higher domestic sales of Citizens Band radios, Inverters and Truck Navigation products, as well as higher European sales. The increase in domestic Citizens Band radio sales reflected strong demand for the Company's all new 29 LX Series, including a limited edition chrome model that was introduced at the end of the quarter. Higher Truck Navigation sales resulted from strong sales of the 5550 PRO, which was introduced earlier this year. European sales included in the Cobra segment increased by more than 48% primarily reflecting higher Detection sales into Eastern Europe. The PPL sales decrease was attributable to lower sales of satellite navigation products exported into Western Europe, however, this decrease was partially offset by higher sales of Snooper Shotsaver(TM) golf GPS and range finder units.
"We are pleased to report substantially improved operating performance over the third quarter of 2010, particularly the increase in sales and gross margin, which was a result of the continued success of our new products and the marketing support behind them," said Jim Bazet, Cobra's Chairman and Chief Executive Officer.
Consolidated gross margin increased from 25.5 percent to 29.9 percent primarily as a result of an improved product mix in both segments. The gross margin for the Cobra segment improved to 29.2 percent from 25.8 percent as higher margin categories recorded significant sales increases. PPL's gross margin increased to 36.0 percent from 23.4 percent last year reflecting both an improved product mix and smaller exchange losses.
Selling, general and administrative expenses increased to nearly $8.0 million in the third quarter from $6.8 million in the prior year. Variable selling expenses increased consistent with the net sales increase, while higher fixed expenses, principally in the Cobra segment, represented increased media, public relations and trade show expenses to support consumer awareness of the new products, such as, iRadar(TM), Cobra Tag(TM) and Phone Lynx(TM). In addition, management incentive expense increased because of the significant improvement in financial results.
Interest expense for the third quarter of 2011 was $272,000 compared to $636,000 for the third quarter of 2010, which included a $349,000 write-off of deferred financing costs from the Company's credit facility that was refinanced in the third quarter of 2010. Other expense increased $1.6 million compared to the prior year's quarter primarily due to a $671,000 loss on the cash surrender value of life insurance that the Company owns for the purpose of funding deferred compensation programs for several current and former officers of the company as compared to a $400,000 gain in the third quarter of 2010.
Interest-bearing debt increased to $20.2 million as of September 30, 2011 compared to $17.9 million at September 30, 2010 representing a seasonal build of inventories to support higher sales levels. Cash on hand at September 30, 2011 was $1.3 million as compared to $1.4 million at September 30, 2010. Inventory at the end of the third quarter increased to $32.5 million from $30.0 million the prior year and accounts receivable at the end of the quarter were $22.1 million, an increase from $18.2 million one year earlier.
On a year-to-date basis, consolidated net sales for Cobra increased by 13.3 percent, to $85.8 million from $75.7 million, driven by new products as well as new and expanded distribution. In addition to this sales increase, improved gross margin resulted in operating income of $2.5 million for the first nine months as compared to a $305,000 operating loss for the prior year's period. The net income for the year-to-date period was $1.1 million, or $0.16 per share, as compared to a net loss of $925,000, or $0.14 per share in the prior year.
In discussing the outlook for the fourth quarter of 2011, as well as the entire year, Mr. Bazet said, "The Company expects to achieve better results in the fourth quarter of 2011 than in the fourth quarter of 2010. The Company also anticipates a substantial increase in profitability in 2011 driven by the introduction of innovative new products as well as new and expanded distribution and marketing channels. In addition, we feel that the slowly improving global economy will continue to favorably impact our business in 2011."
Cobra will be conducting a conference call on November 8, 2011 at 11:00 a.m. EST to discuss third quarter results as well as its current strategies and outlook. The call can also be accessed live or through replay via the Internet at http://www.cobra.com.
About Cobra Electronics
Cobra Electronics is a leading global designer and marketer of communication and navigation products, with a track record of delivering innovative and award-winning products. Building upon its leadership position in the GMRS/FRS two-way radio, radar detector and Citizens Band radio industries, Cobra identified new growth opportunities and has aggressively expanded into the marine market and has expanded its European operations. The Consumer Electronics Association, Forbes and Deloitte & Touche have all recognized Cobra for the company's innovation and industry leadership. To learn more about Cobra Electronics, please visit the Cobra site at www.cobra.com.
Safe Harbor
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks and uncertainties. Actual results may differ materially from these expectations due to factors such as the acceptance of Cobra's new and existing products by customers, the continued success of Cobra's cost containment efforts and the continuation of key distribution channel relationships. Please refer to Cobra's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, for a more detailed discussion of factors that may affect Cobra's performance.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts, unaudited)
For the Three Months Ended For the Nine Months Ended
-------------------------- -------------------------
September 30, September 30, September 30, September 30,
2011 2010 2011 2010
---- ---- ---- ----
Net sales $34,454 $28,909 $85,753 $75,702
Cost of sales 24,155 21,547 61,430 55,719
------ ------ ------ ------
Gross profit 10,299 7,362 24,323 19,983
Selling, general and
administrative expense 7,952 6,840 21,847 20,288
----- ----- ------ ------
Earnings (loss) from
operations 2,347 522 2,476 (305)
Other (expense) income:
Interest expense (272) (636) (795) (1,264)
Other, net (899) 710 (738) 444
Earnings (loss) before taxes 1,176 596 943 (1,125)
Tax benefit (202) (203) (133) (200)
Net earnings (loss) $1,378 $799 $1,076 $(925)
====== ==== ====== =====
Net earnings (loss) per common
share:
Basic $0.21 $0.12 $0.16 $(0.14)
Diluted $0.21 $0.12 $0.16 $(0.14)
Weighted average shares
outstanding:
Basic 6,540 6,471 6,522 6,471
Diluted 6,540 6,471 6,522 6,471
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
ASSETS: September 30, December 31, September 30,
2011 2010 2010
---- ---- ----
Current assets:
Cash $1,289 $1,133 $1,362
Accounts
receivable, net 22,064 22,021 18,249
Inventories, net 32,487 27,614 30,031
Other current
assets 2,931 3,289 3,707
Total current
assets 58,771 54,057 53,349
Property, plant
and equipment,
net 5,485 5,492 5,353
Total other
assets 13,844 14,805 15,339
------ ------ ------
Total assets $78,100 $74,354 $74,041
======= ======= =======
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current
liabilities:
Accounts payable $6,655 $7,205 $8,325
Accrued
liabilities 7,445 6,653 7,271
Short-term debt 20,172 18,042 17,938
------ ------ ------
Total current
liabilities 34,272 31,900 33,534
------ ------ ------
Non-current
liabilities:
Deferred taxes 1,203 1,538 1,686
Deferred
compensation 7,242 7,145 7,072
Other long-term
liabilities 533 565 549
Total non-current
liabilities 8,978 9,248 9,307
----- ----- -----
Equity:
Shareholders'
equity -Cobra 34,850 33,178 31,172
Non-controlling
interest 0 28 28
--- --- ---
Total equity 34,850 33,206 31,200
------ ------ ------
Total liabilities
and shareholders'
equity $78,100 $74,354 $74,041
======= ======= =======
SOURCE Cobra Electronics Corporation
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