- Net sales increase 22% to $1.4 billion
- Operational EPS increases 38% to $1.31; operational EBITDA up 33% to $164 million
- Secures over $2 billion of new automotive awards during the quarter
- Board authorizes $500 million share repurchase program
- Confirms full year guidance for fiscal year 2015
Harman International Industries, Incorporated (NYSE:HAR), the premier audio, visual, infotainment and enterprise automation group, today announced results for the first quarter ended September 30, 2014.
Net sales for the first quarter were $1.43 billion, an increase of 22 percent compared to the same period in the prior year. Infotainment net sales increased 17 percent due to expansion of recently launched platforms, stronger automotive production, and higher take rates. Lifestyle net sales grew 27 percent driven by strong demand for the Company’s home and multimedia product lines and an increase in automotive production and higher take rates in car audio. Net sales in the Professional division increased primarily as a result of the expansion of the Company’s product portfolio into video switching and enterprise automation.
On a GAAP basis, first quarter operating income was $116 million, compared to $69 million in the same period in the prior year, and earnings per diluted share were $1.18 for the quarter compared to $0.66 in the same period in the prior year. Excluding restructuring and other non-recurring items, first quarter operating income was $128 million compared to $93 million in the same period in the prior year and earnings per diluted share were $1.31 compared to $0.95.
“We are pleased that our fiscal year is off to a solid start with 22 percent top-line growth, which also resulted in EBITDA expansion. We continue to see rising take rates for an embedded connected car experience. The fundamentals of our business are intact and despite fluctuations in foreign currency rates, we are confident in our full year guidance,” said Dinesh C. Paliwal, the Company’s Chairman, President and Chief Executive Officer. “Looking further out, demand from automakers for innovative embedded infotainment and car audio solutions remains robust as evidenced by over $2 billion of new automotive awards that we secured in the first quarter of this fiscal year. These proof points give us the confidence to put in place a three year $500 million share buy-back program.”
| FY 2015 Key Figures – Total Company | Three Months Ended September 30 | |||||||||
|
Increase (Decrease) |
||||||||||
| $ millions (except per share data) |
3M FY15 |
3M FY14 |
Including Currency Changes |
Excluding Currency Changes1 |
||||||
| Net sales | 1,429 | 1,172 | 22% | 22% | ||||||
| Gross profit | 415 | 322 | 29% | 29% | ||||||
| Percent of net sales | 29.0% | 27.4% | ||||||||
| SG&A | 299 | 252 | 18% | 19% | ||||||
| Operating income | 116 | 69 | 67% | 68% | ||||||
| Percent of net sales | 8.1% | 5.9% | ||||||||
| EBITDA | 153 | 101 | 52% | 52% | ||||||
| Percent of net sales | 10.7% | 8.6% | ||||||||
| Net Income attributable to HARMAN International Industries, Incorporated | 83 | 46 | 79% | 82% | ||||||
| Diluted earnings per share | 1.18 | 0.66 | 79% | 82% | ||||||
| Restructuring & non-recurring costs | 12 | 24 | ||||||||
|
Non-GAAP – operational1 |
||||||||||
| Gross profit | 418 | 324 | 29% | 29% | ||||||
| Percent of net sales | 29.2% | 27.6% | ||||||||
| SG&A | 290 | 230 | 26% | 26% | ||||||
| Operating income | 128 | 93 | 37% | 39% | ||||||
| Percent of net sales | 8.9% | 8.0% | ||||||||
| EBITDA | 164 | 123 | 33% | 34% | ||||||
| Percent of net sales | 11.5% | 10.5% | ||||||||
| Net Income attributable to HARMAN International Industries, Incorporated | 92 | 67 | 37% | 41% | ||||||
| Diluted earnings per share | 1.31 | 0.95 | 38% | 41% | ||||||
| Shares outstanding – diluted (in millions) | 70 | 70 | ||||||||
| 1 A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. | ||||||||||
Summary of Operations – Gross Margin and SG&A
Non-GAAP gross margin for the first quarter of fiscal 2015 increased 160 basis points to 29.2 percent. The improvement was primarily due to the impact of higher sales volume utilizing a more efficient fixed production cost base and favorable product mix.
In the first quarter of fiscal 2015, SG&A expense as a percentage of net sales increased 64 basis points to 20.3 percent on a non-GAAP basis due to increased investments in marketing and integration expenses related to recent acquisitions.
