NAVR profit margin increases 13 % great news
NAVRRE CORPORATION REPORTS STRONG GROWTH IN SECOND-QUARTER NET INCOME
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NAVR
MINNEAPOLIS--(BUSINESS WIRE)--Oct. 15--
Strategic Focus on Key Computer Products Categories Yields Improved
Gross Margin Sales Increase 13 Percent in Music Products Division
Navarre Corporation (Nasdaq: NAVR), a leading national distributor of music, computer software and interactive CD-ROM products, today reported net income for the second quarter ended September 30, 1997, of $519,000, or 7 cents per share, an increase of $426,000, or 458 percent, over net income of $93,000, or 1 cent per share, in the same period last year. Sales in the second quarter were $48,579,000, up 1 percent from sales of $48,195,000 last year.
Eric Paulson, Navarre's chairman and chief executive officer, said, "We are very pleased with our progress and improved performance in the quarter. Both the computer products and music products divisions contributed to our favorable results. Income from operations increased in the second quarter and EBITDA, an indicator of the company's cash flow, increased 35 percent to $2,126,000, compared with $1,579,000 in last year's second quarter."
Navarre's core distribution business, which does not include subsidiary losses, posted record second quarter earnings of $877,000, a 61-percent increase over $545,000 in last year's second quarter. Operating expenses, while modestly higher than last year, were in line with the company's expectations.
"We are particularly pleased with the result of our strategic focus on key CD-ROM software categories, and with the double-digit sales growth in music products for the quarter," Paulson said.
The computer products division recorded gross margin of 10.1 percent of sales in the second quarter, up from 9.5 percent in the second quarter of last year. The improvement was due to strong performance in the two CD-ROM categories that Navarre has targeted for growth - personal productivity and reference software. "In both of these product categories, we are achieving increases in market share, while maintaining our market position in the more volatile entertainment category," Paulson said, "The market share gains are a good indication of the continued strong support that Navarre has from its customer and vendor communities."
Sales of music products strengthened in the quarter, with an increase of 13 percent over last year. "We are pleased with the music division's contribution to our successful quarter, and we are encouraged by the improved state of the music business overall," Paulson said.
"Our NetRadio Network subsidiary continued to achieve significant progress in the second quarter. This improvement in performance can be attributed to the restructuring of management within the subsidiary. Traffic on the NetRadio Web site has increased to over 12 million page views and 1,000,000 listeners per month. With more than 100 channels in operation, we continue to be a leading audio site on the Internet." NetRadio announced in September a marketing relationship with Microsoft Corporation (Nasdaq: MSFT) and the debut of a virtual sound studio featuring Microsoft's NetShow technology.
Outlook
"We are pleased with the operational and financial performance of our company in the second quarter," Paulson said. "Our music customers are now regaining a degree of financial health and stability, and our strategy of targeted growth in computer products is yielding positive results. I am cautiously optimistic regarding the upcoming holiday selling season."
About Navarre Corporation
Navarre Corporation is a major publisher and distributor of quality consumer software and entertainment products nationwide. Navarre also owns and operates NetRadio Network, the world's largest on-demand Webcaster of originally programmed audio content (www.netradio.net). For further information, please visit Navarre's Web site at www.navarre.com.
Navarre Corporation
(Amounts in thousands, except per share data)
Three months ended Six months ended
September 30, September 30,
1997 1996 1997 1996
Sales $48,579 $48,195 $88,377 $87,788
Gross profit 6,237 6,113 10,513 11,181
Operating expenses 4,850 4,614 10,436 8,775
Operating income 1,538 1,503 310 2,412
Net income (loss) $ 519 $ 93 $ (542) $ 294
Earnings (loss) per
common share $ .07 $ .01 $ (.08) $ .04
Weighted average
common and common
equivalent shares
outstanding 7,189 7,564 6,902 7,494
This news release, as it relates to expectations regarding future
sales and profitability, contains forward-looking statements
regarding future performance of the company and its products. The
company's actual results could differ materially from the estimates
made in the forward-looking statements as a result of a number of
factors, including the risks and uncertainties inherent in the
company's business, the retail market for prerecorded music and
consumer software products, customer buying patterns, new and
different competition in the company's traditional and new markets
and the rate of new product development and commercialization by the
company.
CONTACT: Navarre Corp., Minneapolis
Eric H. Paulson
or
Charles E. Cheney, 612/535-8333 |
