Koss Corporation Releases Fourth Quarter and Full Year Results

Rhea-AI Summary

Koss (NASDAQ: KOSS) reported its Q4 and fiscal year 2024 results. Q4 sales decreased by 5.9% to $2,893,401, with a net loss of $110,369 ($0.01 per share), compared to a $259,839 loss ($0.03 per share) in Q4 2023. Full-year sales declined 6.4% to $12,265,069, resulting in a net loss of $950,911 ($0.10 per share), down from a net income of $8,319,212 in FY 2023.

The company attributed the sales decline to lower demand from its largest European distributor and decreased Direct-to-Consumer sales. However, Education sector sales increased by 60%, and E-tailer sales grew by nearly 50%. CEO Michael J. Koss cited economic factors such as inflation, higher energy costs, and interest rates as challenges affecting both domestic and international sales.

Positive

• Education sector sales increased by approximately 60%
• E-tailer sales grew by nearly 50%
• Q4 net loss decreased to $110,369 from $259,839 in the previous year
• New custom headphone order from a new customer partially offset overall sales decline

Negative

• Q4 sales decreased by 5.9% to $2,893,401
• Full-year sales declined 6.4% to $12,265,069
• Net loss of $950,911 for fiscal year 2024, compared to net income of $8,319,212 in the previous year
• Direct-to-Consumer sales down nearly 20% due to selective consumer spending
• Lower sales in export markets, particularly Europe and Asia

Insights

Financial Analyst

Koss 's Q4 and FY2024 results paint a challenging picture. Q4 sales declined 5.9% year-over-year, while full-year sales dropped 6.4%. The company swung from a net income of $8,319,212 in FY2023 to a net loss of $950,911 in FY2024. This stark reversal is concerning.

Positively, Q4 net loss narrowed to $110,369 from $259,839 last year, suggesting some cost control measures. The 60% growth in Education sector sales and 16% increase in DTC sales for Q4 are bright spots, indicating potential growth areas.

However, the 20% full-year decline in DTC sales and challenges in European and Asian markets are red flags. The company's vulnerability to macroeconomic factors like inflation and interest rates is evident. Investors should closely monitor Koss's ability to navigate these headwinds and capitalize on growth in Education and E-tailer segments.

Market Research Analyst

Koss's performance reflects broader market trends in consumer electronics. The 60% growth in Education sector sales aligns with increased demand for educational technology. However, the 20% decline in full-year DTC sales suggests shifting consumer priorities amidst economic pressures.

The 50% increase in E-tailer sales is noteworthy, indicating a potential shift in consumer purchasing habits towards online platforms. This trend could be important for Koss's future strategy. The custom headphone order from a new customer also hints at potential in the B2B market.

The European market's inventory management issues and Asia's decline in OEM sales highlight the need for diversified market strategies. Koss should focus on adapting to regional economic conditions and exploring new market opportunities to mitigate risks associated with geographic concentration.

MILWAUKEE, Aug. 29, 2024 (GLOBE NEWSWIRE) -- Koss Corporation (NASDAQ: KOSS) (the “Company”), the U.S. based high-fidelity headphone company, has reported its results for the fourth quarter and fiscal year ended June 30, 2024.

Sales for the fourth fiscal quarter of 2024 were $2,893,401 compared to $3,073,350 for the same three-month period in the prior year, a decline of 5.9%. The net loss for the three months ended June 30, 2024 was $110,369 versus a net loss of $259,839 for the last quarter of the prior fiscal year. Both basic and diluted loss per common share for the quarter ended June 30, 2024 were $0.01, compared to basic and diluted loss per common share of $0.03 for the same three-month period one year ago.

“Sales for the quarter were down mostly because of the decline in sales to our largest European distributor, partially offset by gains in the Education sector and the Direct-to-Consumer (“DTC”) market,” Michael J. Koss, Chairman and CEO, said today. “Orders from the European distributor to replenish inventory stock levels were delayed to the following fiscal year to conserve cash in light of the high cost of money and cost of living in Europe. Sales to our Education customers were up approximately 60% and total DTC sales saw a 16% increase as some new product offerings were added to the assortment, as well as a slight resurgence in our highest selling headphone.”

Sales for the year ended June 30, 2024 of $12,265,069 were down $834,582, or 6.4%, from prior year sales of $13,099,651. A net loss of $950,911 was recorded for the fiscal year, a significant decline from the net income of $8,319,212 posted in the prior fiscal year. Both basic and diluted loss per common share for fiscal year 2024 were $0.10 compared to basic income per common share and diluted income per common share of $0.90 and $0.85, respectively, for the previous year.

“The drop in sales for the year was driven by lower sales to our export markets, mainly Europe, as noted, and Asia, which was impacted by lower sales to an original equipment manufacturer of metal detectors. DTC sales were down nearly 20% as customers appear to be more selective in discretionary spending in response to higher inflation and other spending commitments. Conversely, we did see an almost 50% increase in sales to E-tailers, as well a considerable order for custom headphones from a new customer, which partially offset the decline in overall sales,” Koss said. “Continued concerns about inflation, higher energy costs, increased interest rates, and the labor market have affected our sales both domestically and overseas.”

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 "anticipates," "believes," "estimates," "expects," "intends," "plans," "may," "will," "should," "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, 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								Twelve Months Ended
	June 30,								June 30,
	2024				2023				2024				2023
Net sales	$	2,893,401			$	3,073,350			$	12,265,069			$	13,099,651
Cost of goods sold		1,725,607				2,251,680				8,079,622				8,642,237
Gross profit		1,167,794				821,670				4,185,447				4,457,414
Selling, general and administrative expenses		1,485,557				1,434,388				6,057,606				29,341,634
Loss from operations		(317,763	)			(612,718	)			(1,872,159	)			(24,884,220	)
Other income		-				-				-				33,000,000
Interest income		211,162				206,328				847,644				520,809
(Loss) income before income tax provision (benefit)		(106,601	)			(406,390	)			(1,024,515	)			8,636,589
Income tax provision (benefit)		3,768				(146,552	)			(73,604	)			317,377
Net (loss) income	$	(110,369	)		$	(259,839	)		$	(950,911	)		$	8,319,212
(Loss) income per common share:
Basic	$	(0.01	)		$	(0.03	)		$	(0.10	)		$	0.90
Diluted	$	(0.01	)		$	(0.03	)		$	(0.10	)		$	0.85
Weighted-average number of shares:
Basic		9,274,987				9,222,180				9,251,373				9,192,799
Diluted		9,274,987				9,222,180				9,251,373				9,753,760

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

FAQ

What were Koss 's Q4 2024 financial results?

Koss reported Q4 2024 sales of $2,893,401, down 5.9% year-over-year, with a net loss of $110,369 or $0.01 per share.

How did Koss 's full-year 2024 performance compare to 2023?

Koss 's full-year 2024 sales decreased 6.4% to $12,265,069, with a net loss of $950,911, compared to net income of $8,319,212 in fiscal year 2023.

Which sectors showed growth for Koss in fiscal year 2024?

Koss saw growth in the Education sector, with sales up approximately 60%, and E-tailer sales increased by nearly 50%.

What factors contributed to Koss 's sales decline in 2024?

Koss attributed the sales decline to lower demand from its largest European distributor, decreased Direct-to-Consumer sales, and economic factors such as inflation, higher energy costs, and increased interest rates.