Rockford Corporation (Pink Sheets: ROFO) today announced financial results for the three and nine months ended September 30, 2009.
Rockford's net loss for the three months ended September 30, 2009 was $0.5 million compared to a net loss of $0.9 million for the comparable period in 2008. Net loss for the nine month period ended September 30, 2009, was $0.1 million compared to $0.1 million for the comparable period in 2008.
Net sales for the three months ended September 30, 2009 decreased to $12.3 million compared to $18.2 million for the same period in 2008. Net sales for the nine months ended September 30, 2009, were $42.2 million compared to $58.4 million for the same period in 2008. The decrease in net sales was primarily due to lower royalty revenue, reduced sales of Rockford's Lightning Audio branded products, and reduced sales to international customers. The third quarter of 2008 included a one-time promotional shipment of approximately $3.0 million to a major customer for a retail promotion that was not repeated in 2009. OEM royalty revenue for the nine months ended September 30, 2009 and 2008 were $1.1 million and $4.4 million, respectively.
As a percent of net sales, gross margin for the three months ended September 30, 2009 increased to 32.5% compared to 27.9% for the same period in 2008. As a percentage of net sales, gross margin for the nine months ended September 30, 2009 decreased to 31.6% compared to 32.6% for the same period in 2008. The decrease in gross margin percentage for the nine month period was primarily due to lower royalty revenue.
Operating expenses for the three months ended September 30, 2009, decreased 23.8% to $4.4 million compared to the 2008 level of $5.8 million. Operating expenses for the nine month period ended September 30, 2009, decreased 29.5% to $13.7 million compared to $19.4 million for the same period in 2008. In the second quarter of 2008, operating expenses included a special charge of approximately $0.5 million related to costs associated with the elimination of two executive officer positions and in the third quarter of 2008 operating expenses included a special charge of approximately $0.3 million related to costs associated with the closing of Rockford's manufacturing facility and a distributing facility.
William R Jackson, Rockford's President, commented, "The car audio climate continues to be challenging. Our sales this quarter were negatively impacted by lower sales of our Lightning Audio product line to our mass retail customers and overall lower sales to our OEM and international sales channels. In the third quarter of 2008 we had a $3.0 million promotional sale of Lightning Audio products to a large mass retailer. Due to reduced floor-space in the category and changes in this mass retailer's promotional emphasis, we did not have the opportunity to repeat this event in 2009. The OEM business is particularly difficult as new car sales continue to track down compared to 2008. This has had a negative impact on both OEM sales and OEM royalty revenue."
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