SAN DIEGO, May 3, 2012 – InfoSonics Corporation (NASDAQ: IFON), a provider of wireless handset solutions serving Latin America, Europe, Africa and Asia Pacific, today announced results for its first quarter ended March 31, 2012.
“We are extremely pleased to report a profitable quarter driven by a fourth consecutive quarter of record sales of our verykool® products,” said Joseph Ram, president and CEO of InfoSonics. “Sales of verykool® products in the first quarter of 2012 more than tripled in comparison to the same quarter of the prior year. This reflects a doubling of sales to customers in Latin America compared to the prior year, as well as a significant incremental contribution from sales of private label OEM products to customers in Europe, Africa and Asia.”
Commenting further on the results, Mr. Ram noted, “The strong growth of our verykool® business in relation to the expected decline of our low‐margin distribution business resulted in a very favorable product mix. The large majority of our 2012 first quarter revenue was derived from sales of verykool® products compared to a minority in the same quarter of the prior year. As a consequence, our gross profit margin more than doubled from the prior year, rising from 8.6% to 18.3%, which drove us to profitability for the quarter. We are also pleased with many other positive financial metrics for the quarter including a 23% sequential quarterly increase in cash, a 15% sequential decrease in days sales outstanding in receivables and a 21% sequential increase in inventory turns. And, we continue to be debt free. We are optimistic about the rest of 2012 as our development team is working on many new models that we expect to deliver in the coming quarters, and we hope to be able to continue improving the visibility and acceptance of the verykool® brand in the marketplace in both our existing markets and new markets we are exploring.”
InfoSonics reported net sales for the first quarter of 2012 of $12.4 million, which represents a 30% increase over $9.5 million for the first quarter of 2011. Gross profit in the first quarter of 2012 was $2.3 million, a 178% increase over $812,000 in the 2011 first quarter. Operating expenses in the first quarter of 2012 were $2.1 million, an increase of 16% compared to $1.8 million in the 2011 first quarter. This reflects an 11% increase in sales and marketing expenses primarily attributable to increases in personnel, commissions on higher sales volume and expenses related to new product launches. In addition, R&D expenses rose by 40% as we expanded our development team and introduced more new models. Net income for the first quarter of 2012 was $105,000, or $0.01 per share, compared to a net loss of $894,000, or $0.06 per share, in the first quarter of 2011.
At March 31, 2012, the company had $15.3 million in cash, restricted cash and cash equivalents, $18.9 million of net working capital and no outstanding indebtedness.
About InfoSonics Corporation
InfoSonics is a provider of wireless handsets and related products to OEMs, carriers and distributors in Latin America, Europe, Africa and Asia Pacific. The Company designs, develops, manufactures, markets, sells and provides after‐sales support for its own proprietary line of products under the verykool® and other private label brands. Additional information can be found on our corporate website at www.infosonics.com and www.verykool.net.
Except for the factual statements made herein, the information contained in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as “believes,” “hopes,” “intends,” “estimates,” “expects,” “projects,” “plans,” “anticipates” and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Such forward-looking statements are not guarantees of performance and our actual results could differ materially from those contained in such statements. Factors that could cause or contribute to such differences include, without limitation: (1) intense competition internationally, including competition from alternative business models, such as manufacturer-to-carrier sales, which may lead to reduced prices, lower sales, lower gross margins, extended payment terms with customers, increased capital investment and interest costs, bad debt risks and product supply shortages; (2) the ability of the Company’s R&D group to develop new verykool® handsets and successfully introduce them into new emerging markets; (3) extended general economic downturn in world markets; (4) inability to secure adequate supply of competitive products on a timely basis and on commercially reasonable terms; (5) the ability of the Company to improve its gross margins despite intense competition; (6) foreign exchange rate fluctuations, devaluation of a foreign currency, adverse governmental controls or actions, political or economic instability, or disruption of a foreign market, including, without limitation, the imposition, creation, increase or modification of tariffs, taxes, duties, levies and other charges and other related risks of our international operations which could significantly increase selling prices of our products to our customers and end-users; (7) the ability to attract new sources of profitable business from expansion of products or services or risks associated with entry into new markets, including geographies, products and services; (8) an interruption or failure of our information systems or subversion of access or other system controls may result in a significant loss of business, assets, or competitive information; (9) significant changes in supplier terms and relationships, disruptions in production at contract manufacturers or shortages in product supply; (10) loss of business from one or more significant customers; (11) customer and geographical accounts receivable concentration risk and other related risks; (12) rapid product improvement and technological change resulting in inventory obsolescence; (13) uncertain political and economic conditions internationally, including terrorist or military actions; (14) the loss of a key executive officer or other key employees and the integration of new employees; (15) changes in consumer demand for multimedia wireless handset products and features; (16) our failure to adequately adapt to industry changes and to manage potential growth and/or contractions; (17) seasonal buying patterns; (18) the resolution of any litigation for or against the Company; (19) the ability of the Company to have access to adequate capital to fund its operations; and (20) the ability of the Company to generate taxable income in future periods. Reference is also made to other factors detailed from time to time in our periodic reports filed with the Securities and Exchange Commission. These forward- looking statements speak only as of the date of this release and we undertake no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances after the date of this release.
Vernon A. LoForti
Chief Financial Officer