Fort Lauderdale, FL, Nov. 19, 2019 (GLOBE NEWSWIRE) -- The Singing Machine Company, Inc. (“Singing Machine” or the “Company”) (OTCQX: SMDM) – the North American leader in consumer karaoke products – today announced its financial results for its second quarter ended September 30, 2019.
Second Quarter Snapshot:
- During the quarter, the Company recognized a loss of goods due to moisture damage during ocean transport while goods were en route to a major customer for the holidays. This incident resulted in a loss of net sales of approximately $1.5 million.
- Reported net sales of $20.1 million for the quarter; $24.9 million for the six-months year-to-date period.
- Gross margins increased by 6.7% to 28.1% compared to 21.4% in the prior year.
- Operating expenses increased by approximately $1.2 million, of which approximately $328,000 was attributable to the damaged goods incident.
- Reported net income of $0.6 million compared to approximately $1.2 million in the prior year.
Singing Machine reports net sales of approximately $20.1 million for the quarter-ended September 30, 2019 period compared to $24.3 million in the comparable quarter of the prior year. The decrease in net sales was primarily due to a decrease in sales to the Company’s UK and Canadian distributors as well as a reversal of net sales in the amount of approximately $1.5 million due to the damaged goods that shipped to one major customer.
Gross profit margin increased by 6.7% to 28.1% compared to approximately 21.4% reported in the prior year. The increase in gross margin was mainly due to sales of its new Carpool Karaoke Microphone, which yielded greater margin than the traditional product mix.
Total operating expenses increased to $4.8 million compared to $3.5 million in the prior year. The increase in expenses was primarily due increased marketing spend and royalties associated with the Carpool Karaoke Mic as well as approximately $0.3 million due to the damaged goods incident.
As a result, the Company reported a net income of $0.62 million compared to net income of $1.2 million in the prior year.
Management Commentary:
Gary Atkinson, Singing Machine CEO, commented, “We are pleased at the strong margin growth reported this quarter, attributable to the new Carpool Karaoke Microphone launch. The good news was offset by unforeseen marine cargo damage that occurred while product was in transport to a major retail customer. The loss caused by the damage put a damper on what otherwise would have been a strong quarter. However, we are fortunate to have marine cargo insurance specifically for these types of catastrophic events.” Atkinson added, “These holidays, the gift of karaoke, singing and music entertainment has never been hotter. Look for many exciting promotions on Singing Machine products at every single major retailer this coming holiday season!”
Lionel Marquis, Company CFO commented, “The net effect of the damage claim resulted in a loss of net sales of approximately $1.5 million and a $0.29 million negative impact to gross profit margin. There was also about $0.3 million extra one-time expenses incurred with transporting the damaged goods and storing them in a temporary warehouse. We anticipate recuperation of most of these expenses upon settlement of our insurance claim.”
Earnings Call Information:
The Company will host a conference call today, Tuesday, November 19, beginning at 10:00 am Eastern time to discuss these results and answer questions. If you would like to participate on the call, please dial (877) 876-9176 and use conference ID: SMDM.
An audio rebroadcast of the call will be available later in the day after the earnings call and can be heard at: www.singingmachine.com/investors.
For access to the full report, including financial tables, click here.
About The Singing Machine
Based in the U.S., Singing Machine® is the North American leader in consumer karaoke products. The first to provide karaoke systems for home entertainment in the United States, the Company sells its products worldwide through major mass merchandisers and on-line retailers. We offer the industry's widest line of at-home karaoke entertainment products, which allow consumers to find a machine that suits their needs and skill level. As the most recognized brand in karaoke, Singing Machine products incorporate the latest technology for singing practice, music listening, entertainment and social sharing. The Singing Machine provides consumers the best warranties in the industry and access to over 13,000 songs for streaming and download. Singing Machine products are sold through most major retailers in North America and also internationally. See www.singingmachine.com for more details.
Investor Relations Contact:
Brendan Hopkins
(407) 645-5295
investors@singingmachine.com
www.singingmachine.com
www.singingmachine.com/investors
Forward-Looking Statements
This press release contains forward‑looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward‑looking statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management and include, but are not limited to statements about our financial statements for the fiscal year ended March 31, 2019. You should review our risk factors in our SEC filings which are incorporated herein by reference. Such forward‑looking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forward‑looking statement to reflect events or circumstances after the date of this release.