- Q4 Net Sales climb 22% to $1.4 billion; Full Year Net Sales up 24% to $5.3 billion
- Q4 Operational EPS up 38% to $1.25; Full Year Operational EPS up 43% to $4.41
- Issues guidance for Fiscal Year 2015; Raises Fiscal Year 2016 Revenue outlook $800 million to $6.85 billion
- Industry-leading automotive backlog grows to record high of $20.5 billion
- Expands portfolio into enterprise automation and control through the acquisition of AMX
Harman International Industries, Incorporated (NYSE:HAR), the premier audio, visual, and infotainment group, today announced results for the fourth quarter and full year ended June 30, 2014.
Net sales for the fourth quarter were $1.444 billion, an increase of 22 percent compared to the same period last year, as all three of the Company’s divisions reported increased sales. Infotainment net sales increased due to the expansion of recent production launches, higher automotive production, and higher take rates. Lifestyle growth was driven by strong demand for the Company’s home and multimedia products launched earlier in the year and an increase in automotive production and take rates in the car audio business. HARMAN’s Professional Division net sales increased as a result of strong demand for the Company’s lighting and audio products.
Excluding restructuring and non-recurring charges, fourth quarter operating income was $121 million, compared to $87 million in the same period last year. On the same non-GAAP basis, earnings per diluted share were $1.25 for the quarter compared to $0.91 in the same period last year. On a GAAP basis, fourth quarter operating income was $57 million compared to $16 million in the same period last year, and earnings per diluted share were $0.62 for the quarter compared to $0.08in the prior year.
Net sales for the full year were $5.348 billion, an increase of 24 percent compared to the prior year, as all three of the Company’s divisions reported increased sales. Excluding restructuring and non-recurring charges, fiscal year 2014 operating income was $430 million compared to $290 million in the prior year. On the same non-GAAP basis, earnings per diluted share were $4.41 for the year compared to $3.07 in the prior year. On a GAAP basis, fiscal year 2014 operating income was$330 million compared to $201 million in prior year, and earnings per diluted share were $3.36 compared to $2.04 in the prior year.
“We are extremely pleased that, for the fourth consecutive quarter, all three of our divisions achieved double-digit top-line growth, facilitating a 38 percent improvement in earnings per share,” said Dinesh C. Paliwal, the Company’s Chairman, President and CEO. “In our automotive businesses, we are capitalizing on robust demand for an embedded connected car experience and a more favorable production environment. In our other businesses, we continue to gain traction with our award winning products and have recently expanded our portfolio into exciting new markets including enterprise automation and control. We are executing our strategy and, as a result, we have issued strong guidance for fiscal year 2015, raised our outlook for fiscal year 2016 and reported a Company record backlog.”
Paliwal continued, “While achieving record performance in fiscal year 2014, we are taking additional restructuring actions as we continue to relentlessly focus on cost management and align our operations with growth markets. We firmly believe that innovation combined with cost leadership continues to position us for sustainable long-term success.”
| FY 2014 Key Figures – Total Company | Three Months Ended June 30 | Twelve Months Ended June 30 | |||||||||||||||
| Increase
(Decrease) |
Increase(Decrease) | ||||||||||||||||
| $ millions (except per share data) | 3M
FY14 |
3M
FY13 |
Including
Currency Changes |
Excluding
Currency Changes1 |
12M
FY14 |
12M
FY13 |
Including
Currency Changes |
Excluding
Currency Changes1 |
|||||||||
| Net sales | 1,444 | 1,182 | 22% | 20% | 5,348 | 4,298 | 24% | 22% | |||||||||
| Gross profit | 391 | 285 | 37% | 35% | 1,457 | 1,104 | 32% | 30% | |||||||||
| Percent of net sales | 27.1% | 24.1% | 27.2% | 25.7% | |||||||||||||
| SG&A | 334 | 269 | 24% | 21% | 1,127 | 903 | 25% | 23% | |||||||||
| Operating income | 57 | 16 | 268% | 307% | 330 | 201 | 64% | 64% | |||||||||
| Percent of net sales | 4.0% | 1.3% | 6.2% | 4.7% | |||||||||||||
| EBITDA | 92 | 52 | 78% | 81% | 462 | 329 | 40% | 39% | |||||||||
| Percent of net sales | 6.4% | 4.4% | 8.6% | 7.7% | |||||||||||||
| Net Income attributable to HARMAN International Industries, Incorporated | 43 | 5 | n.m. | n.m. | 235 | 142 | 65% | 64% | |||||||||
| Diluted earnings per share | 0.62 | 0.08 | n.m. | n.m. | 3.36 | 2.04 | 64% | 63% | |||||||||
| Restructuring& non-recurring costs | 64 | 72 | 100 | 88 | |||||||||||||
| Non-GAAP1 | |||||||||||||||||
| Gross profit | 394 | 316 | 25% | 23% | 1,466 | 1,140 | 29% | 27% | |||||||||
| Percent of net sales | 27.3% | 26.7% | 27.4% | 26.5% | |||||||||||||
| SG&A | 274 | 228 | 20% | 18% | 1,036 | 850 | 22% | 21% | |||||||||
| Operating income | 121 | 87 | 38% | 38% | 430 | 290 | 48% | 47% | |||||||||
| Percent of net sales | 8.3% | 7.4% | 8.0% | 6.7% | |||||||||||||
| EBITDA | 154 | 121 | 28% | 27% | 555 | 413 | 35% | 33% | |||||||||
| Percent of net sales | 10.7% | 10.2% | 10.4% | 9.6% | |||||||||||||
| Net Income attributable to HARMAN International Industries, Incorporated | 87 | 63 | 38% | 38% | 308 | 214 | 44% | 41% | |||||||||
| Diluted earnings per share | 1.25 | 0.91 | 38% | 38% | 4.41 | 3.07 | 43% | 41% | |||||||||
| Shares outstanding – diluted (in millions) | 70 | 70 | 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 fourth quarter of fiscal 2014 increased 59 basis points to 27.3 percent. The improvement was primarily due to the impact of higher sales volume on fixed production costs.
In the fourth quarter of fiscal 2014, SG&A expense as a percentage of net sales decreased 36 basis points to 18.9 percent on a non-GAAP basis.
Fiscal 2015 and 2016 Outlook
HARMAN today provided guidance for fiscal 2015 and raised its financial outlook for fiscal 2016.
| Fiscal Year 2015 | HARMAN | Infotainment Division | Lifestyle Division | Professional Division | |||||
| Sales | ~$6.0 billion | ~$3.1 billion | ~$1.8 billion | ~$1.1 billion | |||||
| EBITDA* | ~$685 million | ~$375 million | ~$265 million | ~$175 million | |||||
| EPS* | ~$5.25 |
| Fiscal Year 2016 | HARMAN | Infotainment Division | Lifestyle Division | Professional Division | |||||
| Sales | ~$6.85 billion | ~$3.7 billion | ~$1.95 billion | ~$1.2 billion | |||||
| ~EBITDA* | ~$880 million | ~$490 million | ~$310 million | ~$215 million | |||||
| *Non-GAAP, excluding restructuring and non-recurring items | |||||||||
Key planning assumptions are outlined in the Company’s slide deck posted on the Investors section of the Company’s website at: www.harman.com
