Koss Corporation Releases First Quarter Results

Rhea-AI Summary

Koss Corporation reports Q1 results with a slight increase in sales but a net loss. Positive signals from European distributors offset by a drop in DTC sales and decline in sales to domestic distributors. Gross margins down due to customer mix and higher freight rates. Cost savings initiatives provide some positive impact. Freight rates expected to rise next quarter.

Positive

• Positive signals from European distributors
• Cost savings initiatives provide some positive impact

Negative

• Net loss for Q1
• Drop in DTC sales
• Decline in sales to domestic distributors
• Gross margins down due to customer mix and higher freight rates
• Freight rates expected to rise next quarter

MILWAUKEE, Oct. 26, 2023 (GLOBE NEWSWIRE) -- Koss Corporation (NASDAQ: KOSS) (the “Company”), the U.S. based high-fidelity headphone company, has reported its results for the first quarter ended September 30, 2023.

Sales for the first quarter ended September 30, 2023 were $3,373,938 compared to $3,364,129 for the same period in the prior year, an increase of $9,809, or 0.3%. The net loss for the three months ended September 30, 2023 was $257,609 compared to net income of $9,944,743 for the first quarter of the prior year. Basic and diluted loss per common share for the first quarter of fiscal year 2024 was $0.03 compared to basic income per common share of $1.09 and diluted income per common share of $1.01 for the same three-month period one year ago.

"Orders from two distributors in Europe signaled a positive change particularly in light of the ongoing war in eastern Europe,” Michael J. Koss, Chairman and CEO, said today. “Unfortunately, a reduction in consumer confidence, leading to a slowdown in spending, resulted in a drop in our Direct-to-Consumer (“DTC”) sales, nearly negating the increase in export sales. We also experienced a decline in sales to certain domestic distributors due to continued overstocked inventory levels of non-Koss product at these distributors.”

“Gross margins for the first three months of the current fiscal year were down versus the same period in the prior year,” Koss continued. “The less favorable customer mix of sales, with a lower volume of higher margin DTC and domestic distributor sales, drove the decline in margins. The continued sell through of inventory that was shipped from suppliers at higher freight rates also adversely impacted the gross margins. The favorability in fixed manufacturing expenses for the three months ended September 30, 2023 due to cost savings initiatives provided some positive impact compared to the same period in the prior year. Freight rates are expected to make a slow rise during the next quarter due to the current labor landscape, the recent settlement of threatened carrier strikes and labor disputes, and rising energy prices. The Company continues to monitor the supply chain environment.”

About Koss Corporation

Koss Corporation markets a complete line of high-fidelity headphones, wireless Bluetooth® speakers, computer headsets, telecommunications headsets, active noise canceling headphones, and wireless headphones.

Forward-Looking Statements

This press release contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “aims,” "anticipates," "believes," "estimates," "expects," "intends," "plans," “thinks,” "may," "will," “shall,” "should," “could,” “would,” "forecasts," "predicts," "potential," "continue," or the negative of such terms and other comparable terminology. These statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual events or results may differ materially. In evaluating forward-looking statements, you should specifically consider various factors that may cause actual results to vary from those contained in the forward-looking statements, such as general economic conditions, inflationary cost environment, supply chain disruption, the impacts of the COVID-19 pandemic, geopolitical instability and war, consumer demand for the Company's and its customers' products, competitive and technological developments, foreign currency fluctuations, and costs of operations. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances or new information. In addition, such uncertainties and other operational matters are discussed further in the Company's quarterly and annual filings with the Securities and Exchange Commission.

KOSS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
	Three Months Ended
	September 30
	2023				2022
Net sales	$	3,373,938			$	3,364,129
Cost of goods sold		2,306,248				2,168,305
Gross profit		1,067,690				1,195,824
Selling, general and administrative expenses		1,536,279				23,680,196
(Loss) from operations		(468,589	)			(22,484,372	)
Other income		—				33,000,000
Interest income		212,859				27,056
(Loss) income before income tax provision		(255,730	)			10,542,684
Income tax provision		1,879				597,941
Net (loss) income	$	(257,609	)		$	9,944,743
(Loss) income per common share:
Basic	$	(0.03	)		$	1.09
Diluted	$	(0.03	)		$	1.01
Weighted-average number of shares:
Basic		9,234,795				9,157,284
Diluted		9,234,795				9,849,043

CONTACT:	Michael J. Koss
	Chairman & CEO
	(414) 964-5000
	mjkoss@koss.com

FAQ

What were the sales for Q1?

Sales for Q1 were $3,373,938 compared to $3,364,129 for the same period last year, an increase of 0.3%.

What was the net income for Q1?

The net loss for Q1 was $257,609 compared to net income of $9,944,743 for the same period last year.

Why did the gross margins decline?

The decline in gross margins was due to a less favorable customer mix of sales, lower volume of higher margin DTC and domestic distributor sales, and the continued sell through of inventory shipped at higher freight rates.

What is expected for freight rates next quarter?

Freight rates are expected to rise next quarter due to the current labor landscape, settlement of threatened carrier strikes and labor disputes, and rising energy prices.

What impact did cost savings initiatives have?

Cost savings initiatives provided some positive impact on fixed manufacturing expenses for Q1 compared to the same period last year.