STAMFORD, Conn.--(BUSINESS WIRE)--Harman International Industries, Incorporated (NYSE:HAR), the leading global infotainment and audio group, today announced results for the third quarter ended March 31, 2014.
Net sales for the third quarter were $1.404 billion, an increase of 32 percent compared to the same period last year, as all three of the Company’s divisions reported increased sales. Infotainment net sales were up due to higher automotive production and take rates. Lifestyle growth was driven by one large order from a mobile telecommunications customer and accelerated sales of new products launched earlier in the year in the home and multimedia business, and an increase in automotive production in the car audio business. Professional net sales increased as a result of the expansion of the Company’s product portfolio into lighting.
On a GAAP basis, third quarter operating income was $101 million, compared to $38 million in the same period last year, and earnings per diluted share were $1.05 for the quarter compared to $0.50. Excluding restructuring and non-recurring charges, third quarter non-GAAP operating income was $108 million, compared to $66 million in the same period last year. On the same non-GAAP basis, earnings per diluted share were $1.12 for the quarter compared to $0.79 in the same period last year.
“We are extremely pleased that, for the third consecutive quarter, all three of our divisions reported double-digit top-line growth, facilitating a 42 percent improvement in EBITDA,” 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. There is pent up demand, particularly in Europe, which we expect will stabilize in the coming quarters. In our other businesses, we continue to gain traction with our award-winning innovative products and the expansion of our distribution channels globally. As a result of our continued success and the current positive trends in automotive industry, we have increased our revenue and EPS forecast for a second time this year.”
| FY 2014 Key Figures – Total Company | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||
|
Increase |
Increase |
|||||||||||||||||||||||
| $ millions (except per share data) |
3M |
3M |
Including |
Excluding |
9M |
9M |
Including |
Excluding |
||||||||||||||||
| Net sales | 1,404 | 1,062 | 32% | 31% | 3,904 | 3,116 | 25% | 23% | ||||||||||||||||
| Gross profit | 365 | 269 | 36% | 34% | 1,066 | 819 | 30% | 28% | ||||||||||||||||
| Percent of net sales | 26.0% | 25.4% | 27.3% | 26.3% | ||||||||||||||||||||
| SG&A & Other | 263 | 231 | 14% | 13% | 793 | 634 | 25% | 23% | ||||||||||||||||
| Operating income | 101 | 38 | 165% | 169% | 273 | 186 | 47% | 46% | ||||||||||||||||
| Percent of net sales | 7.2% | 3.6% | 7.0% | 6.0% | ||||||||||||||||||||
| EBITDA | 134 | 71 | 88% | 89% | 370 | 278 | 33% | 32% | ||||||||||||||||
| Percent of net sales | 9.6% | 6.7% | 9.5% | 8.9% | ||||||||||||||||||||
| Net Income | 73 | 35 | 110% | 108% | 191 | 137 | 40% | 37% | ||||||||||||||||
| Diluted earnings per share | 1.05 | 0.50 | 110% | 108% | 2.74 | 1.97 | 39% | 37% | ||||||||||||||||
| Restructuring-related costs | 7 | 28 | 37 | 17 | ||||||||||||||||||||
|
Non-GAAP1 |
||||||||||||||||||||||||
| Gross profit | 367 | 273 | 34% | 33% | 1,071 | 824 | 30% | 28% | ||||||||||||||||
| Percent of net sales | 26.1% | 25.7% | 27.4% | 26.4% | ||||||||||||||||||||
| SG&A & Other | 259 | 207 | 25% | 25% | 762 | 622 | 23% | 21% | ||||||||||||||||
| Operating income | 108 | 66 | 63% | 61% | 309 | 202 | 53% | 51% | ||||||||||||||||
| Percent of net sales | 7.7% | 6.2% | 7.9% | 6.5% | ||||||||||||||||||||
| EBITDA | 139 | 98 | 42% | 40% | 401 | 292 | 37% | 35% | ||||||||||||||||
| Percent of net sales | 9.9% | 9.2% | 10.3% | 9.4% | ||||||||||||||||||||
| Net Income | 78 | 55 | 41% | 37% | 221 | 151 | 46% | 42% | ||||||||||||||||
| Diluted earnings per share | 1.12 | 0.79 | 41% | 37% | 3.16 | 2.17 | 46% | 42% | ||||||||||||||||
| 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 third quarter of fiscal 2014 increased 43 basis points to 26.1 percent. The improvement was primarily due to the impact of higher sales volume on fixed production costs and favorable product mix in the Infotainment Division, partially offset by lower gross margin in the Lifestyle Division due to a change in product mix.
In the third quarter of fiscal 2014, SG&A and Other expense as a percentage of net sales decreased 103 basis points to 18.4 percent on a non-GAAP basis. The improvement was primarily related to operating leverage from higher sales.
Fiscal 2014 Outlook
HARMAN today raised its financial outlook for fiscal 2014. The Company now forecasts global revenue of ~$5.275 billion, non-GAAP EBITDA of ~$550 million and earnings per share of ~$4.36.
| FY'14 Guidance | Sales | EBITDA* | EPS* | ||||||
| --Revised May 1, 2014-- | ~$5.275 billion | ~$550 million | ~$4.361 | ||||||
| --Revised Jan 30, 2014-- | ~$5.100 billion | ~$535 million | ~$4.161 | ||||||
| --Aug 8, 2013-- | ~$4.700 billion | ~$490 million | ~$3.852 | ||||||
| *Non-GAAP, excluding restructuring and non-recurring items | |||||||||
| 1Assumes outstanding share count of 70 million shares | |||||||||
| 2Assumes outstanding share count of 67 million shares | |||||||||
Investor Call Today, May 1, 2014
At 11:00 a.m. EDT today, HARMAN’s management will host an analyst and investor conference call to discuss the third quarter results. Those who want to participate via audio in the earnings conference call should dial 1 (800) 785 8944 (U.S.) or +1 (212) 231 2928 (International) ten minutes before the call and reference HARMAN, Access Code: 21713193.
In addition, HARMAN invites you to visit the Investors section of its website at: www.harman.com where visitors can sign-up for email alerts and conveniently download copies of historical earnings releases and supporting slide presentations, among other documents. The fiscal third quarter earnings release and supporting materials were posted on the site at approximately 8:00 a.m. EDT, Thursday, May 1, 2014.
A replay of the call will also be available following its completion at approximately 1:00 p.m. EDT. The replay will be available through August 1, 2014 at 1:00 p.m. EDT. To listen to the replay, dial 1 (800) 633 8284 (U.S.) or +1 (402) 977 9140 (International), Access Code: 21713193. If you need technical assistance, call the toll-free Global Crossing Customer Care Line at 1 (800) 473 0602 (U.S.) or +1 (303) 446 4604 (International).
General Information
HARMAN (www.harman.com) designs, manufactures, and markets a wide range of infotainment and audio solutions for the automotive, consumer, and professional markets. It is a recognized world leader across its customer segments with premium brands including AKG®, Harman Kardon®, Infinity®, JBL®, Lexicon®, and Mark Levinson® and leading-edge connectivity, safety and audio technologies. The Company is admired by audiophiles across multiple generations and supports leading professional entertainers and the venues where they perform. More than 25 million automobiles on the road today are equipped with HARMAN audio and infotainment systems. HARMAN has a workforce of 15,200 people across the Americas, Europe, and Asia and reported sales of $5.1 billion for the last twelve months ended March 31, 2014. The Company’s shares are traded on the New York Stock Exchange under the symbol NYSE:HAR.
A reconciliation of the non-GAAP measures included in this press release to the most comparable GAAP measures is provided in the tables contained at the end of this press release. HARMAN does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.
Forward-Looking Information
Except for historical information contained herein, the matters discussed in this earnings release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended. One should not place undue reliance on these statements. The Company bases these statements on particular assumptions that it has made in light of its industry experience, as well as its perception of historical trends, current market conditions, current economic data, expected future developments and other factors that the Company believes are appropriate under the circumstances. These statements involve risks, uncertainties and assumptions that could cause actual results to differ materially from those suggested in the forward-looking statements, including but not limited to: (1) the Company’s ability to maintain profitability in its infotainment division if there are delays in its product launches which may give rise to significant penalties and increased engineering expense; (2) the loss of one or more significant customers, or the loss of a significant platform with an automotive customer; (3) fluctuations in currency exchange rates, particularly with respect to the value of the U.S. Dollar and the Euro; (4) the Company’s ability to successfully implement its global footprint initiative, including achieving cost reductions and other benefits in connection with the restructuring of its manufacturing, engineering, procurement and administrative organizations; (5) fluctuations in the price and supply of raw materials including, without limitation, petroleum, copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, or shortages of materials, parts and components; (6) the inability of the Company’s suppliers to deliver products at the scheduled rate and disruptions arising in connection therewith; (7) the Company’s ability to maintain a competitive technological advantage through innovation and leading product designs; (8) the Company’s failure to maintain the value of its brands and implementing a sufficient brand protection program; and (9) other risks detailed in the Harman International Industries, Incorporated Annual Report on Form 10-K for the fiscal year ended June 30, 2013 and other filings made by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statement except as required by law.
This earnings release also makes reference to the Company’s awarded business, which represents the estimated future lifetime net sales for all customers. The Company's future awarded business does not represent firm customer orders. The Company reports its awarded business primarily based on written award letters. To validate these awards, the Company uses various assumptions including global vehicle production forecasts, customer take rates for the Company’s products, revisions to product life cycle estimates and the impact of annual price reductions and exchange rates, among other factors. These assumptions are updated and reported externally on an annual basis. The Company updates the estimates and awarded business quarterly by adding the value of new awards received and subtracting sales recorded during the quarter. These quarterly updates do not include any assumptions for increased take rates, revisions to product life cycle, or any other factors.
HAR-E
APPENDIX
Infotainment Division
| FY 2014 Key Figures – Infotainment | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||
|
Increase |
Increase |
|||||||||||||||||||||||
| $ millions |
3M |
3M |
Including |
Excluding |
9M |
9M |
Including |
Excluding |
||||||||||||||||
| Net sales | 736 | 569 | 29% | 26% | 2,066 | 1,669 | 24% | 20% | ||||||||||||||||
| Gross profit | 158 | 110 | 44% | 41% | 464 | 351 | 32% | 28% | ||||||||||||||||
| Percent of net sales | 21.4% | 19.3% | 22.5% | 21.0% | ||||||||||||||||||||
| SG&A & Other | 97 | 88 | 10% | 8% | 309 | 255 | 21% | 17% | ||||||||||||||||
| Operating income | 60 | 21 | 184% | 175% | 155 | 96 | 62% | 58% | ||||||||||||||||
| Percent of net sales | 8.2% | 3.7% | 7.5% | 5.8% | ||||||||||||||||||||
| EBITDA | 77 | 38 | 105% | 99% | 204 | 143 | 43% | 39% | ||||||||||||||||
| Percent of net sales | 10.5% | 6.6% | 9.9% | 8.5% | ||||||||||||||||||||
| Restructuring-related costs | 3 | 11 | 23 | 11 | ||||||||||||||||||||
|
Non-GAAP1 |
||||||||||||||||||||||||
| Gross profit | 160 | 110 | 46% | 43% | 469 | 351 | 34% | 30% | ||||||||||||||||
| Percent of net sales | 21.7% | 19.3% | 22.7% | 21.0% | ||||||||||||||||||||
| SG&A & Other | 96 | 77 | 25% | 24% | 290 | 244 | 19% | 15% | ||||||||||||||||
| Operating income | 63 | 32 | 95% | 87% | 179 | 107 | 67% | 62% | ||||||||||||||||
| Percent of net sales | 8.6% | 5.7% | 8.7% | 6.4% | ||||||||||||||||||||
| EBITDA | 78 | 49 | 59% | 54% | 223 | 154 | 45% | 41% | ||||||||||||||||
| Percent of net sales | 10.6% | 8.6% | 10.8% | 9.2% | ||||||||||||||||||||
| 1 A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. | ||||||||||||||||||||||||
Net sales in the third quarter of fiscal 2014 were $736 million, an increase of 29 percent compared to the prior year, or 26 percent excluding the impact of foreign currency translation. The increase in sales was due to higher automotive production, the expansion of the Company’s recent production launches across car lines, and higher take rates.
On a non-GAAP basis in the third quarter of fiscal 2014, gross margin increased 244 basis points to 21.7 percent compared to the same period in the prior year primarily due to the impact of improved leverage on fixed production costs, benefits from footprint migration restructuring initiatives, and an increased mix of scalable infotainment systems. SG&A spending decreased 45 basis points to 13.1 percent of net sales primarily due to improved operating leverage on higher sales.
Infotainment Division Highlights
During the quarter, HARMAN expanded recent platform launches across additional car lines, secured new business awards, and successfully commenced production on new programs globally.
BMW expanded the NBT infotainment system across additional car lines. In addition, Daimler extended the NTG5 infotainment solution previously launched in the Mercedes S-Class flagship vehicle into their C- and V-Class vehicles. The Company also successfully launched programs across a number of VW Group vehicles, including the Audi TT, the Porsche Macan and 911 Targa, and the Lamborghini Huracan.
HARMAN won an award to equip Scion vehicles with a Gen II infotainment system in North America. Toyota Europe also awarded HARMAN follow-on business to supply infotainment solutions across its car models.
At the Geneva Motor Show in March, a number of automotive manufacturers launched new vehicles featuring HARMAN technology. HARMAN also continued its global roll-out of advanced solutions for the connected car with its next-generation scalable infotainment platform based on innovative system architecture that offers rapid development of connected car apps and advanced safety features while protecting the integrity of the system against cyber security threats. The new platform offers an HTML-5 based application environment which paves the way for an app ecosystem for embedded infotainment. In addition, the new platform enhances security with hypervisor-based domain separation securing critical vehicle functions from errant or malicious software. This solution provides a foundation to support the future of autonomous driving.
HARMAN has started integrating smart apps like Apple CarPlay™ and Google Automotive Link™ into its embedded infotainment solutions.
Lifestyle Division
| FY 2014 Key Figures – Lifestyle | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||
|
Increase |
Increase |
|||||||||||||||||||||||
| $ millions |
3M |
3M |
Including |
Excluding |
9M |
9M |
Including |
Excluding |
||||||||||||||||
| Net sales | 468 | 327 | 43% | 43% | 1,232 | 991 | 24% | 23% | ||||||||||||||||
| Gross profit | 131 | 98 | 33% | 33% | 374 | 295 | 27% | 26% | ||||||||||||||||
| Percent of net sales | 27.9% | 29.9% | 30.4% | 29.7% | ||||||||||||||||||||
| SG&A & Other | 79 | 75 | 6% | 5% | 230 | 184 | 25% | 24% | ||||||||||||||||
| Operating income | 51 | 23 | 119% | 128% | 144 | 111 | 30% | 30% | ||||||||||||||||
| Percent of net sales | 11.0% | 7.2% | 11.7% | 11.2% | ||||||||||||||||||||
| EBITDA | 60 | 33 | 83% | 87% | 169 | 137 | 23% | 23% | ||||||||||||||||
| Percent of net sales | 12.8% | 10.0% | 13.7% | 13.8% | ||||||||||||||||||||
| Restructuring-related costs | 2 | 15 | 8 | 4 | ||||||||||||||||||||
|
Non-GAAP1 |
||||||||||||||||||||||||
| Gross profit | 131 | 99 | 32% | 31% | 374 | 297 | 26% | 25% | ||||||||||||||||
| Percent of net sales | 27.9% | 30.3% | 30.4% | 30.0% | ||||||||||||||||||||
| SG&A & Other | 78 | 61 | 28% | 27% | 223 | 182 | 22% | 21% | ||||||||||||||||
| Operating income | 53 | 39 | 38% | 38% | 151 | 115 | 32% | 31% | ||||||||||||||||
| Percent of net sales | 11.4% | 11.8% | 12.3% | 11.6% | ||||||||||||||||||||
| EBITDA | 62 | 47 | 32% | 32% | 176 | 139 | 26% | 25% | ||||||||||||||||
| Percent of net sales | 13.2% | 14.3% | 14.3% | 14.0% | ||||||||||||||||||||
| 1 A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. | ||||||||||||||||||||||||
Net sales in the third quarter of fiscal 2014 were $468 million, an increase of 43 percent compared to same period in the prior year. The growth in the home and multimedia business was primarily due to one large order from a mobile telecommunications customer and accelerated sales of new products launched earlier in the year. The growth in the car audio business was primarily driven by an increase in automotive production and higher take rates.
On a non-GAAP basis in the third quarter of fiscal 2014, gross margin decreased by 238 basis points to 27.9 percent compared to the same period in the prior year primarily due to a higher proportion of revenue coming from the home and multimedia business versus the higher margin car audio business. SG&A expense as a percentage of sales decreased by 197 basis points to 16.6 percent primarily due to improved operating leverage.
Lifestyle Division Highlights
The Lifestyle Division continued to gain momentum with its award-winning home and multimedia and car audio solutions. During the quarter, HARMAN entered into an agreement with Softbank (Japan), including its subsidiaries Sprint (U.S.A.), Trikomsel (Indonesia), and Brightstar (worldwide). Softbank is exclusively selling the newly designed Harman Kardon® Onyx Studio™ portable wireless speaker to its customers globally. The Onyx Studio™ is now the third HARMAN product to exceed one million units shipped.
HARMAN also received 19 Red Dot (international), 13 iF (Germany), and eight CES (USA) design and innovation awards for its home and multimedia products. In February, the Company opened a new retail flagship store in Moscow. The Company also has flagship stores in Beijing, New York, Seoul, and Shanghai.
In addition, HARMAN secured new and follow-on car audio awards from Chrysler, Lexus, Toyota, as well as Chinese automakers Brilliance, Great Wall and Dongfeng. Building on its award to provide a high-end Revel audio solution for Ford’s Lincoln vehicles, HARMAN won its first order for HALOsonic External Electronic Sound Synthesis, or eESS. HALOsonic eESS generates engine sounds for ultra-quiet electric vehicles, helping to create a safer environment for other drivers and pedestrians.
Chrysler presented HARMAN with its 2013 Innovation Award for the outstanding performance of the HALOsonic Engine Order Cancellation (EOC) technology. Frost & Sullivan also recognized the Company with its prestigious 2014 Global Product Leadership Award for Premium Automotive Audio. Finally, both Clari-Fi™ and QuantumLogic Surround 3D® each won Plus X Awards for Innovation and High Quality.
HARMAN continued to roll-out its proprietary Clari-Fi™ technology. Previously branded as Signal Doctor™, Clari-Fi™ leverages HARMAN’s expertise in music recording, signal processing and psycho-acoustics to restore the full sound that is forfeited during the compression process. Clari-Fi™ has been launched in the Company’s JBL Authentics product line and debuted in the automotive market in the new Lexus NX vehicle. It is also an integral part of the new HTC One M8 Harman Kardon edition smart phone launched by Sprint in North America earlier this week.
Professional Division
| FY 2014 Key Figures – Professional | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||
|
Increase |
Increase |
|||||||||||||||||||||||
| $ millions |
3M |
3M |
Including |
Excluding |
9M |
9M |
Including |
Excluding |
||||||||||||||||
| Net sales | 200 | 165 | 21% | 23% | 605 | 453 | 34% | 35% | ||||||||||||||||
| Gross profit | 76 | 61 | 25% | 26% | 227 | 172 | 32% | 33% | ||||||||||||||||
| Percent of net sales | 38.1% | 37.0% | 37.6% | 38.1% | ||||||||||||||||||||
| SG&A & Other | 52 | 40 | 28% | 28% | 151 | 112 | 35% | 35% | ||||||||||||||||
| Operating income | 25 | 21 | 19% | 22% | 77 | 60 | 27% | 30% | ||||||||||||||||
| Percent of net sales | 12.4% | 12.6% | 12.7% | 13.3% | ||||||||||||||||||||
| EBITDA | 30 | 25 | 19% | 22% | 92 | 71 | 30% | 32% | ||||||||||||||||
| Percent of net sales | 14.9% | 15.2% | 15.2% | 15.6% | ||||||||||||||||||||
| Restructuring-related costs | 1 | 2 | 3 | 1 | ||||||||||||||||||||
|
Non-GAAP1 |
||||||||||||||||||||||||
| Gross profit | 76 | 64 | 20% | 21% | 228 | 175 | 30% | 31% | ||||||||||||||||
| Percent of net sales | 38.1% | 38.4% | 37.7% | 38.6% | ||||||||||||||||||||
| SG&A & Other | 50 | 41 | 23% | 23% | 148 | 113 | 31% | 31% | ||||||||||||||||
| Operating income | 26 | 22 | 16% | 18% | 80 | 62 | 30% | 32% | ||||||||||||||||
| Percent of net sales | 13.0% | 13.6% | 13.2% | 13.6% | ||||||||||||||||||||
| EBITDA | 31 | 27 | 16% | 18% | 95 | 72 | 32% | 34% | ||||||||||||||||
| Percent of net sales | 15.5% | 16.2% | 15.7% | 15.9% | ||||||||||||||||||||
| 1 A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. | ||||||||||||||||||||||||
Net sales in the third quarter of fiscal 2014 were $200 million, an increase of 21 percent compared to the prior year or 23 percent excluding foreign currency translation. The increase in net sales is primarily due to the expansion of the Company’s product portfolio into lighting as a result of the acquisition of Martin Professional.
On a non-GAAP basis in the third quarter of fiscal 2014, gross margin decreased 30 basis points to 38.1 percent compared to the prior year primarily related to new product introduction launch costs. SG&A expense as a percentage of sales increased 33 basis points to 25.2 percent due to integration costs related to acquisitions.
Professional Division Highlights
The Professional Division continued to experience robust demand for its audio and lighting products for use at live entertainment events and fixed venue installations worldwide.
In the third quarter, the Company’s audio and lighting system solutions were installed at FirstEnergy Stadium, home of the Cleveland Browns, and the new Marassi Civic Center in Egypt. The Company’s systems were installed as upgrades for numerous other entertainment, hospitality and transportation facilities, such as the San Francisco Muni Public Transit System.
HARMAN’s Professional products powered a wide range of high-profile televised award shows, special events music festivals, and tours. These included the 47th Annual Super Bowl Halftime Show, the NBA All-Star Game Concert, and the GRAMMY Awards. In Brazil, HARMAN audio systems were also utilized at world-renowned Carnival events in key cities such as Rio de Janeiro and Sao Paulo.
HARMAN’s Professional Division launched 50 new products during the third quarter. At the annual National Association of Music Merchants (NAMM) trade show, the Company’s recently-launched AKG and JBL products won Technical Excellence & Creativity Awards.
Other (Corporate)
| FY 2014 Key Figures – Other | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||
|
Increase |
Increase |
|||||||||||||||||||||||
| $ millions |
3M |
3M |
Including |
Excluding |
9M |
9M |
Including |
Excluding |
||||||||||||||||
| SG&A & Other | 35 | 28 | 27% | 27% | 104 | 82 | 26% | 26% | ||||||||||||||||
| Restructuring-related costs | 1 | 0 | 2 | 0 | ||||||||||||||||||||
|
Non-GAAP1 |
||||||||||||||||||||||||
| SG&A & Other | 34 | 28 | 24% | 24% | 101 | 82 | 23% | 23% | ||||||||||||||||
| 1 A non-GAAP measure, see reconciliations of non-GAAP measures later in this release. | ||||||||||||||||||||||||
Other (Corporate) SG&A expense includes compensation, benefit and occupancy costs for corporate employees, new technology innovation, and expenses associated with the Company’s brand identity campaign. SG&A expenses as a percentage of the Company’s net sales decreased by 17 basis points to 2.4%.
|
HARMAN International Industries, Incorporated |
||||||||||||||||||
| (In thousands, except earnings per share data; unaudited) |
Three Months Ended March 31, |
Nine Months Ended March 31, |
||||||||||||||||
|
2014 |
2013 |
2014 |
2013 |
|||||||||||||||
| Net sales | $ | 1,404,235 | $ | 1,061,772 | $ | 3,904,064 | $ | 3,115,607 | ||||||||||
| Cost of sales | 1,039,462 | 792,577 | 2,838,192 | 2,296,372 | ||||||||||||||
| Gross profit | 364,773 | 269,195 | 1,065,872 | 819,235 | ||||||||||||||
| Selling, general and administrative expenses | 263,340 | 230,933 | 793,201 | 633,500 | ||||||||||||||
| Operating income | 101,433 | 38,262 | 272,671 | 185,735 | ||||||||||||||
| Other expenses: | ||||||||||||||||||
| Interest expense, net | 2,111 | 1,614 | 5,936 | 11,296 | ||||||||||||||
| Foreign exchange losses (gains), net | 774 | (1,645 | ) | 4,745 | (506 | ) | ||||||||||||
| Miscellaneous, net | 2,682 | 1,174 | 5,803 | 3,783 | ||||||||||||||
| Income before income taxes | 95,866 | 37,119 | 256,187 | 171,162 | ||||||||||||||
| Income tax expense, net | 22,369 | 2,207 | 64,515 | 34,206 | ||||||||||||||
| Equity in net loss of unconsolidated subsidiaries | 112 | 39 | 206 | 39 | ||||||||||||||
| Net income | $ | 73,385 | $ | 34,873 | $ | 191,466 | $ | 136,917 | ||||||||||
| Earnings per share: | ||||||||||||||||||
| Basic | $ | 1.06 | $ | 0.50 | $ | 2.77 | $ | 1.99 | ||||||||||
| Diluted | $ | 1.05 | $ | 0.50 | $ | 2.74 | $ | 1.97 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||
| Basic | 68,939 | 69,109 | 69,067 | 68,932 | ||||||||||||||
| Diluted | 69,888 | 69,892 | 69,877 | 69,676 | ||||||||||||||
|
HARMAN International Industries, Incorporated |
||||||||
| (In thousands; unaudited) |
March 31, 2014 |
June 30, 2013 |
||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 566,873 | $ | 454,258 | ||||
| Short-term investments | 0 | 10,008 | ||||||
| Receivables, net | 932,881 | 722,711 | ||||||
| Inventories | 654,997 | 549,831 | ||||||
| Other current assets | 332,039 | 352,244 | ||||||
| Total current assets | 2,486,790 | 2,089,052 | ||||||
| Property, plant and equipment, net | 445,100 | 425,182 | ||||||
| Goodwill | 257,592 | 234,342 | ||||||
| Deferred tax assets, long-term, net | 240,857 | 260,749 | ||||||
| Other assets | 237,963 | 226,360 | ||||||
| Total assets | $ | 3,668,302 | $ | 3,235,685 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Current portion of long-term debt | $ | 33,750 | $ | 30,000 | ||||
| Short-term debt | 15,475 | 4,930 | ||||||
| Accounts payable | 664,735 | 498,055 | ||||||
| Accrued liabilities | 497,458 | 402,704 | ||||||
| Accrued warranties | 157,973 | 128,411 | ||||||
| Income taxes payable | 23,008 | 13,414 | ||||||
| Total current liabilities | 1,392,399 | 1,077,514 | ||||||
| Long-term debt | 228,785 | 255,043 | ||||||
| Pension liability | 172,358 | 167,687 | ||||||
| Other non-current liabilities | 107,585 | 90,570 | ||||||
| Total liabilities | 1,901,127 | 1,590,814 | ||||||
| Total shareholders’ equity | 1,767,175 | 1,644,871 | ||||||
| Total liabilities and shareholders’ equity | $ | 3,668,302 | $ | 3,235,685 | ||||
|
HARMAN International Industries, Incorporated |
|||||||||||||
| (In thousands, except earnings per share data; unaudited) |
Three Months Ended March 31, 2014 |
||||||||||||
|
GAAP |
Adjustments |
Non-GAAP |
|||||||||||
| Net sales | $ | 1,404,235 | $ | 0 | $ | 1,404,235 | |||||||
| Cost of sales | 1,039,462 | (2,110)a | 1,037,352 | ||||||||||
| Gross profit | 364,773 | 2,110 | 366,883 | ||||||||||
| Selling, general and administrative expenses | 263,340 | (4,535)b | 258,805 | ||||||||||
| Operating income | 101,433 | 6,645 | 108,078 | ||||||||||
| Other expenses: | |||||||||||||
| Interest expense, net | 2,111 | 0 | 2,111 | ||||||||||
| Foreign exchange losses, net | 774 | 0 | 774 | ||||||||||
| Miscellaneous, net | 2,682 | 0 | 2,682 | ||||||||||
| Income before income taxes | 95,866 | 6,645 | 102,511 | ||||||||||
| Income tax expense, net | 22,369 | 1,987(c | ) | 24,356 | |||||||||
| Equity in net loss of unconsolidated subsidiaries | 112 | 0 | 112 | ||||||||||
| Net income | $ | 73,385 | $ | 4,658 | $ | 78,043 | |||||||
| Earnings per share: | |||||||||||||
| Basic | $ | 1.06 | $ | 0.07 | $ | 1.13 | |||||||
| Diluted | $ | 1.05 | $ | 0.07 | $ | 1.12 | |||||||
| Weighted average shares outstanding: | |||||||||||||
| Basic | 68,939 | 68,939 | |||||||||||
| Diluted | 69,888 | 69,888 | |||||||||||
| a) | Restructuring expense in Cost of Sales was $2.1 million for projects to increase manufacturing productivity | |
| b) | Restructuring expense in SG&A was $2.6 million primarily due to projects to increase productivity in engineering and administrative functions; other non-recurring expense included in SG&A was $1.9 million. | |
| c) |
The tax benefits are calculated by multiplying the actual restructuring / non-recurring charge in each individual country by the discrete tax rate within that specific country. |
|
HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of its non-recurring charges. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in HARMAN’s consolidated financial statements prepared in accordance with US GAAP.
|
HARMAN International Industries, Incorporated |
|||||||||||||
| (In thousands, except earnings per share data; unaudited) |
Nine Months Ended March 31, 2014 |
||||||||||||
|
GAAP |
Adjustments |
Non-GAAP |
|||||||||||
| Net sales | $ | 3,904,064 | $ | 0 |
$ |
3,904,064 | |||||||
| Cost of sales | 2,838,192 | (5,543)a | 2,832,649 | ||||||||||
| Gross profit | 1,065,872 | 5,543 | 1,071,415 | ||||||||||
| Selling, general and administrative expenses | 793,201 | (30,990)b | 762,211 | ||||||||||
| Operating income | 272,671 | 36,533 | 309,204 | ||||||||||
| Other expenses: | |||||||||||||
| Interest expense, net | 5,936 | 0 | 5,936 | ||||||||||
| Foreign exchange losses, net | 4,745 | 0 | 4,745 | ||||||||||
| Miscellaneous, net | 5,803 | 0 | 5,803 | ||||||||||
| Income before income taxes | 256,187 | 36,533 | 292,720 | ||||||||||
| Income tax expense, net | 64,515 | 7,137(c | ) | 71,652 | |||||||||
| Equity in net loss of unconsolidated subsidiaries | 206 | 0 | 206 | ||||||||||
| Net income | $ | 191,466 | $ | 29,396 | $ | 220,862 | |||||||
| Earnings per share: | |||||||||||||
| Basic | $ | 2.77 | $ | 0.43 | $ | 3.20 | |||||||
| Diluted | $ | 2.74 | $ | 0.42 | $ | 3.16 | |||||||
| Weighted average shares outstanding: | |||||||||||||
| Basic | 69,067 | 69,067 | |||||||||||
| Diluted | 69,877 | 69,877 | |||||||||||
| a) | Restructuring expense in Cost of Sales was $6.1 million due to projects to increase productivity in manufacturing; other non- recurring expense included in Cost of Sales was income of $0.6 million. | |
| b) | Restructuring expense in SG&A was $27.6 million primarily due to projects to increase productivity in engineering and administrative functions; other non-recurring expense in SG&A was 3.4 million. | |
| c) | The tax benefits are calculated by multiplying the actual restructuring / non-recurring charge in each individual country by the discrete tax rate within that specific country. | |
HARMAN International has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of our non-recurring charges. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in our consolidated financial statements prepared in accordance with US GAAP.
|
Harman International Industries, Incorporated |
|||||||||||||||
| (In thousands, except earnings per share data; unaudited) |
Three Months Ended |
||||||||||||||
|
GAAP |
Adjustments |
Non-GAAP |
|||||||||||||
| Net sales | $ | 1,061,772 | $ | 0 | $ | 1,061,772 | |||||||||
| Cost of sales | 792,577 | (3,659)a | 788,918 | ||||||||||||
| Gross profit | 269,195 | 3,659 | 272,854 | ||||||||||||
| Selling, general and administrative expenses | 230,933 | (24,328)b | 206,605 | ||||||||||||
| Operating income | 38,262 | 27,987 | 66,249 | ||||||||||||
| Other expenses: | |||||||||||||||
| Interest expense, net | 1,614 | 0 | 1,614 | ||||||||||||
| Foreign exchange (gains), net | (1,645 | ) | 0 | (1,645 | ) | ||||||||||
| Miscellaneous, net | 1,174 | 0 | 1,174 | ||||||||||||
| Income before income taxes | 37,119 | 27,987 | 65,106 | ||||||||||||
| Income tax expense, net | 2,207 | 7,676(c | ) | 9,883 | |||||||||||
| Equity in net loss of unconsolidated subsidiaries | 39 | 0 | 39 | ||||||||||||
| Net income | $ | 34,873 | $ | 20,311 | $ | 55,184 | |||||||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 0.50 | $ | 0.29 | $ | 0.80 | |||||||||
| Diluted | $ | 0.50 | $ | 0.29 | $ | 0.79 | |||||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 69,109 | 69,109 | |||||||||||||
| Diluted | 69,892 | 69,892 | |||||||||||||
| a) | Restructuring expense in Cost of Sales was $3.7 million due to projects to increase efficiency in manufacturing. | |
| b) | Restructuring expense in SG&A was $24.3 million primarily due to projects to increase efficiency in engineering and administrative functions. | |
| c) | The tax benefits are calculated by multiplying the actual restructuring \ non-recurring charge in each individual country by the discrete tax rate within that specific country. | |
HARMAN International has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of our non-recurring charges. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in our consolidated financial statements prepared in accordance with US GAAP.
|
Harman International Industries, Incorporated |
|||||||||||||||
| (In thousands, except earnings per share data; unaudited) |
Nine Months Ended March 31, 2013 |
||||||||||||||
|
GAAP |
Adjustments |
Non-GAAP |
|||||||||||||
| Net sales | $ | 3,115,607 | $ | 0 | $ | 3,115,607 | |||||||||
| Cost of sales | 2,296,372 | (4,654)a | 2,291,718 | ||||||||||||
| Gross profit | 819,235 | 4,654 | 823,889 | ||||||||||||
| Selling, general and administrative expenses | 633,500 | (11,872)b | 621,628 | ||||||||||||
| Operating income | 185,735 | 16,526 | 202,261 | ||||||||||||
| Other expenses: | |||||||||||||||
| Interest expense, net | 11,296 | (1,128 | ) | 10,168 | |||||||||||
| Foreign exchange (gains), net | (506 | ) | 0 | (506 | ) | ||||||||||
| Miscellaneous, net | 3,783 | (26 | ) | 3,757 | |||||||||||
| Income before income taxes | 171,162 | 17,680 | 188,842 | ||||||||||||
| Income tax expense, net | 34,206 | 3,612(c | ) | 37,818 | |||||||||||
| Equity in net loss of unconsolidated subsidiaries | 39 | 0 | 39 | ||||||||||||
| Net income | $ | 136,917 | $ | 14,068 | $ | 150,985 | |||||||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 1.99 | $ | 0.20 | $ | 2.19 | |||||||||
| Diluted | $ | 1.97 | $ | 0.20 | $ | 2.17 | |||||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 68,932 | 68,932 | |||||||||||||
| Diluted | 69,676 | 69,676 | |||||||||||||
| a) | Restructuring expense in Cost of Sales was $4.7 million due to projects to increase efficiency in manufacturing. | |
| b) | Restructuring expense in SG&A was $24.4 million primarily due to projects to increase productivity in engineering and administrative functions; other non-recurring income in SG&A was $12.5 million due to the release of contingent consideration related to the acquisition of MWM Acoustics. | |
| c) | The tax benefits are calculated by multiplying the actual restructuring \ non-recurring charge in each individual country by the discrete tax rate within that specific country. | |
HARMAN International has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of our non-recurring charges. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in our consolidated financial statements prepared in accordance with US GAAP.
|
Harman International Industries, Incorporated |
||||||||||||||||||
| (In thousands, except earnings per share data; unaudited) |
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2013 |
||||||||||||||||
|
GAAP |
Adjustments |
Non-GAAP |
GAAP |
Adjustments |
Non-GAAP |
|||||||||||||
| HARMAN: | ||||||||||||||||||
| Operating Income | 101,433 | 6,645 | 108,078 | 38,262 | 27,987 | 66,249 | ||||||||||||
| Depreciation & Amortization | 33,063 | (2,086) | 30,977 | 33,151 | (1,226) | 31,925 | ||||||||||||
| EBITDA | 134,496 | 4,559 | 139,055 | 71,413 | 26,761 | 98,174 | ||||||||||||
| INFOTAINMENT: | ||||||||||||||||||
| Operating Income | 60,313 | 2,894 | 63,207 | 21,208 | 11,235 | 32,443 | ||||||||||||
| Depreciation & Amortization | 16,611 | (2,087) | 14,524 | 16,377 | 0 | 16,377 | ||||||||||||
| EBITDA | 76,924 | 807 | 77,731 | 37,585 | 11,235 | 48,820 | ||||||||||||
| LIFESTYLE: | ||||||||||||||||||
| Operating Income | 51,381 | 1,801 | 53,182 | 23,431 | 15,082 | 38,513 | ||||||||||||
| Depreciation & Amortization | 8,635 | 0 | 8,635 | 9,445 | (1,215) | 8,230 | ||||||||||||
| EBITDA | 60,016 | 1,801 | 61,817 | 32,876 | 13,867 | 46,743 | ||||||||||||
| PROFESSIONAL: | ||||||||||||||||||
| Operating Income | 24,813 | 1,150 | 25,963 | 20,794 | 1,668 | 22,462 | ||||||||||||
| Depreciation & Amortization | 5,104 | 1 | 5,105 | 4,339 | (11) | 4,328 | ||||||||||||
| EBITDA | 29,917 | 1,151 | 31,068 | 25,133 | 1,657 | 26,790 | ||||||||||||
HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of its non-recurring charges. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in HARMAN’s consolidated financial statements prepared in accordance with US GAAP.
|
Harman International Industries, Incorporated |
||||||||||||||||||
| (In thousands, except earnings per share data; unaudited) |
Nine Months Ended March 31, 2014 |
Nine Months Ended March 31, 2013 |
||||||||||||||||
|
GAAP |
Adjustments |
Non-GAAP |
GAAP |
Adjustments |
Non-GAAP |
|||||||||||||
| HARMAN: |
|
|||||||||||||||||
| Operating Income | 272,671 | 36,533 | 309,204 | 185,735 | 16,526 | 202,261 | ||||||||||||
| Depreciation & Amortization | 97,302 | (5,541) | 91,761 | 91,994 | (2,222) | 89,772 | ||||||||||||
| EBITDA | 369,973 | 30,992 | 400,965 | 277,729 | 14,304 | 292,033 | ||||||||||||
| INFOTAINMENT: | ||||||||||||||||||
| Operating Income | 155,431 | 23,479 | 178,910 | 96,132 | 10,941 | 107,073 | ||||||||||||
| Depreciation & Amortization | 48,851 | (4,823) | 44,028 | 46,432 | 0 | 46,432 | ||||||||||||
| EBITDA | 204,282 | 18,656 | 222,938 | 142,564 | 10,941 | 153,505 | ||||||||||||
| LIFESTYLE: | ||||||||||||||||||
| Operating Income | 143,725 | 7,510 | 151,235 | 110,522 | 4,240 | 114,762 | ||||||||||||
| Depreciation & Amortization | 25,091 | (621) | 24,470 | 26,511 | (2,148) | 24,363 | ||||||||||||
| EBITDA | 168,816 | 6,889 | 175,705 | 137,033 | 2,092 | 139,125 | ||||||||||||
| PROFESSIONAL: | ||||||||||||||||||
| Operating Income | 76,697 | 3,220 | 79,917 | 60,307 | 1,346 | 61,653 | ||||||||||||
| Depreciation & Amortization | 15,020 | (97) | 14,923 | 10,466 | (74) | 10,392 | ||||||||||||
| EBITDA | 91,717 | 3,123 | 94,840 | 70,773 | 1,272 | 72,045 | ||||||||||||
HARMAN has provided a reconciliation of non-GAAP measures in order to provide the users of these financial statements with a better understanding of its non-recurring charges. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in HARMAN’s consolidated financial statements prepared in accordance with US GAAP.
|
HARMAN International Industries, Incorporated |
|||
| Total Company Liquidity |
March 31,
2014 |
||
| $ millions | |||
| Cash & cash equivalents | $567 | ||
| Short-term investments | 0 | ||
| Available credit under Revolving Credit Facility | 746 | ||
| Total liquidity | $1,313 | ||
