Skullcandy Beats Q2 Earnings, Revenue In-line, Ups Outlook

Zacks

Skullcandy, Inc. (SKUL) reported better-than-expected results for second-quarter 2014. Earnings came in at 6 cents per share, improving over a loss of 2 cents per share recorded in the year-ago quarter. The bottom-line surpassed the Zacks Consensus Estimate of one cent.  

Innovation and diversified product offerings drove Skullcandy’s upbeat earnings in the quarter.

Revenue

Skullcandy generated net revenues of $53.9 million, rising 6.0% year over year but in line with the Zacks Consensus Estimate.

Revenue from the company’s domestic operations grew 6% year over year to $39.5 million, representing 73.3% of net revenues. International revenues were $14.4 million, up 5.9% from $13.6 million in the year-ago quarter.

Margins

Cost of revenues advanced 5.8% year over year, representing 55.0% of total revenue, slightly below 55.1% in the prior-year quarter. Selling, general and administrative expenses, as a percentage of total revenue, were 42.6%. Operating margin in the quarter was 2.4%.

Balance Sheet/ Cash Flow

Exiting second-quarter 2014, Skullcandy had cash and cash equivalents of $44.1 million, down from $48.2 million in the previous quarter.

In first-half 2014, the company generated net cash of $7.1 million, down 41.2% from $12.1 million in the year-ago comparable period. Capital spending soared 74.4% year over year to $3.3 million.

Outlook

For 2014, Skullcandy anticipates sales to grow in the mid to high single digit range. Generally Accepted Accounting principles (:GAAP) earnings are predicted within 22−26 cents per share versus the earlier projected range of 16−20 cents. GAAP operating income will likely be in $8.3−$9.7 million range.   

For the third quarter, sales are estimated to grow in the 7−9% range while GAAP earnings will likely come within 2−5 cents per share.

With a market capitalization of nearly $189 million, Skullcandy presently sports a Zacks Rank #1 (Buy). Other stocks worth considering in the industry include Dolby Laboratories, Inc. (DLB), Panasonic Corporation (PCRFY) and Sharp Corporation (SHCAY). All these companies carry a Zacks Rank #2 (Buy).
 

Read the Full Research Report on DLB
Read the Full Research Report on SHCAY
Read the Full Research Report on SKUL
Read the Full Research Report on PCRFY


Zacks Investment Research

View Comments (0)