Skullcandy, Inc. Reports First Quarter 2016 Results
Skullcandy US NPD Sell-Through Increased 11%; Astro US NPD Sell-Through Increased 24%
PARK CITY, UTAH – May 4, 2016 – Skullcandy, Inc. (NASDAQ: SKUL) today announced financial results for the first quarter ended March 31, 2016.
First quarter 2016 reported results versus the same quarter a year ago:
Net sales: $46.3 million vs. $45.6 million, up 1% (up 6% excluding China sales operations from both periods)*
Gross margin: 37.5% vs. 40.9%, down 340 basis points (down 140 basis points excluding China sales operations from both periods)*
Selling, general and administrative expense (SG&A): $24.1 million vs. $22.3 million, up 8% (up 9% excluding China sales operations from both periods)*
SG&A expense as a percent of net sales: 52% vs. 49%
Operating loss: $6.8 million vs. $3.6 million, increase of $3.1 million (increase of $1.6 million excluding China sales operations from both periods)*
Loss per share: $0.17 vs. $0.13, increase of $0.04 (flat excluding China sales operations from both periods)*
Cash, cash equivalents and short-term investments: increase of $22.2 million or 94% from fourth quarter of 2015
“We are pleased with our first sales quarter performance, particularly at retail, given the number of internal and external challenges we faced to start the year. Domestic sell-through of the Skullcandy brand grew more than twice as fast as the rest of the audio headphone industry, according to NPD, driven by triple digit growth of our expanded wireless offering. At the same time, Astro retail sales once again outpaced the competition despite significant supply constraints following a very strong holiday season. On the international front, we continued to take necessary actions to improve our China wholesale position which unfortunately offset solid growth in several of our other overseas markets and negatively impacted earnings per share by $0.02 cents versus our plan. We continue to be cautiously optimistic about our prospects for growth in the second half of 2016 as our innovative audio and gaming product introductions provide us with added momentum and some of the current top-line headwinds begin to subside,” said Skullcandy President and CEO, Hoby Darling.
Net sales in the first quarter of 2016 increased 1% to $46.3 million from $45.6 million in the same quarter a year ago. Domestic (U.S.) net sales increased 4% to $31.8 million from $30.6 million in the same quarter a year ago, primarily due to strong holiday sell through that resulted in post-holiday replenishment sales of audio and wireless products. International (Non U.S.) net sales decreased 3% to $14.5 million from $15.0 million in the same quarter a year ago, primarily due to continued clean-up in China, partially offset by strong sales in Europe, Canada, Japan and Mexico.
Gross profit in the first quarter of 2016 decreased 7% to $17.4 million from $18.7 million in the same quarter a year ago. Gross margin decreased to 37.5% in the first quarter of 2016 from 40.9% in the same quarter a year ago primarily due to higher retailer promotional credits and returns in the U.S. and China.
Selling, general and administrative (SG&A) expenses in the first quarter of 2016 increased 8% to $24.1 million from $22.3 million in the same quarter a year ago. The increase in SG&A expenses is primarily due to increases in personnel related expenses, demand creation and research and innovation expenses for holiday 2016 and early 2017 Astro and Skullcandy products, partially offset by decreases in IT expenses. As a percentage of net sales, SG&A expenses increased 300 basis points to 52% as compared to 49% in the same quarter a year ago.
Operating loss in the first quarter of 2016 was $6.8 million compared to $3.6 million in the same quarter a year ago. The increase in operating loss is due to a lower gross profit and increased SG&A expenses to fund future growth, partially offset by an increase in net sales.
Net loss in the first quarter of 2016 was $4.9 million, or $(0.17) per share, based on 28.6 million weighted average diluted common shares outstanding. Net loss in the same quarter a year ago was $3.7 million, or $(0.13) per share, based on 28.3 million weighted average diluted common shares outstanding.
The following information was filed by Skullcandy, Inc. (SKUL) on Wednesday, May 4, 2016 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.