PITTSBURGH, May 11, 2011 (GLOBE NEWSWIRE) -- DynaVox (Nasdaq:DVOX), the world's leading provider of communication and education products for individuals with significant speech, language and learning disabilities, today announced results for the third quarter ended April 1, 2011.
For the third quarter ended April 1, 2011, net sales were $28.7 million, an increase of 1.0% compared to net sales of $28.4 million for the third quarter ended April 2, 2010. Sales of the Company's speech generating devices increased 1.3% to $22.7 million, and sales of its special education software were flat at $6.0 million from the prior year.
Gross profit for the third quarter of fiscal year 2011 declined 7.3% to $19.9 million, compared to $21.5 million in the third quarter of the prior year. The Company's gross profit margin was 69.6%, compared to 75.8% in the prior year. The gross margin decline was due mainly to a less favorable device product mix, slightly lower margin on software sales, reduced royalty revenue, and an inventory obsolescence charge of approximately $0.5 million mainly related to a previously acquired product line. Excluding the inventory obsolescence charge, gross margin was 71.2% for the third quarter and 70.9% for the first 39 weeks of fiscal 2011, representing declines of 460 basis points and 440 basis points, respectively, from the corresponding prior-year periods.
Operating income was $3.8 million in the third quarter of fiscal year 2011, compared to operating income of $5.3 million in the same period a year ago. Operating income for the third quarter of fiscal year 2011 included a $1.0 million impairment loss related to intangible assets and fixed assets acquired as part of the Company's product acquisition in July 2009. Operating expenses, excluding the impairment loss, decreased $1.1 million compared to the prior year's third quarter of $16.2 million. Excluding the $0.5 million inventory obsolescence charge and the $1.0 million impairment loss, operating income was $5.3 million for the third quarter and $6.2 for the first 39 weeks of fiscal 2011.
Third quarter GAAP net income was $0.7 million, or $0.07 per share. Adjusted pro forma net income and adjusted pro forma net income per share, as defined below, were $2.6 million, or $0.09 per share, for the third quarter of fiscal year 2011.
Adjusted EBITDA, as defined below, declined 14.0% in the third quarter of fiscal year 2011 to $6.5 million, from $7.6 million in the previous year.
"In spite of the ongoing macroeconomic challenges, during the third quarter we saw some signs of improvements and our consolidated top line was roughly equal to the last year," said Ed Donnelly, DynaVox's Chief Executive Officer. "Sales trends across both devices and software provide validation of our efforts to adapt to the environment as well as the fact that the demand for our products and services remains intact. We are encouraged by the steady sequential upside trend in our U.S. device business, which comprises almost three fourths of our total revenue."
Results for the Thirty-Nine Weeks Ended April 1, 2011
For the thirty-nine weeks ended April 1, 2011, net sales declined 7.0% to $75.8 million, compared to $81.2 million in the same period last year.
Gross profit for the first thirty-nine weeks of fiscal 2011 declined 13.1% to $53.2 million, compared to $61.2 million in the same period last year. The Company's gross profit margin decreased to 70.2% from 75.3% in the same period last year.
Operating income for the thirty-nine weeks ended April 1, 2011 was $4.7 million, compared to $15.2 million in the prior year period.
GAAP net income for the thirty-nine weeks ended April 1, 2011 was $0.3 million, or $0.03 per share. Adjusted pro forma net income for the thirty-nine weeks, as defined by the Company, was $2.1 million, or $0.07 per share.
Adjusted EBITDA for the first thirty-nine weeks of fiscal 2011 was $11.2 million, compared to $20.8 million in the same period last year.
Fiscal 2011 Guidance
For fiscal year 2011, the Company now projects net sales to decline in the range of 6% to 8% compared to the previously expected decline of 10% to 15% from fiscal year 2010. The Company continues to expect Adjusted EBITDA for fiscal year 2011 to be between $19.0 million and $23.0 million and adjusted pro forma net income per share in the range of $0.21 to $0.27 per share.
The conference call is scheduled to begin at 4:45 p.m. EDT on May 11, 2011. The call will be broadcast live over the Internet, hosted at the Investor Relations section of DynaVox's website at , and will be archived online through May 25, 2011. In addition, listeners may dial (877) 312-5529 in North America, and international listeners may dial (253) 237-1147. Participants from the Company will be Ed Donnelly, Chief Executive Officer, and Ken Misch, Chief Financial Officer.
A telephonic playback will be available from 7:45 p.m. EDT, May 11, 2011 through May 25, 2011. To hear the playback participants may dial (800) 642-1687 and international listeners may dial (706) 645-9291. The conference ID number is 61594173.
Explanatory Note and Non-GAAP Financial Measures
DynaVox Inc. completed an initial public offering (IPO) on April 27, 2010. As a result of the IPO and certain other recapitalization transactions, DynaVox Inc. became the sole managing member of and has a controlling interest in DynaVox Systems Holdings LLC and its subsidiaries ("DynaVox Holdings" or "Predecessor"). References to "DynaVox," the "Company," and "Successor" refer, subsequent to the IPO and related transactions, to DynaVox Inc. and its consolidated subsidiaries and these references (other than "Successor") refer, prior to the IPO and related transactions, to DynaVox Holdings.
This release presents adjusted pro forma net income, which as defined by the Company represents net income before non-controlling interest and after pro forma corporate income tax expense applied at an assumed 38.0% rate, which includes a provision for U.S. federal income taxes, assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction and assumes the full exchange of Holdings Units of DynaVox Holdings into Class A Common Stock. Adjusted pro forma net income also excludes the effect of the above-described impairment loss related to intangible assets and fixed assets acquired as part of the Company's previous product acquisition. Adjusted pro forma net income per share consists of adjusted pro forma net income divided by the aggregate number of the Company's Class A Common Stock outstanding, assuming full exchange of Holdings Units of DynaVox Holdings into Class A Common Stock of DynaVox Inc. and giving effect to the dilutive impact, if any, of stock options and restricted stock awards. The Company believes that Adjusted Pro Forma Net Income, when presented together with the comparable measure presented in accordance with GAAP, is useful to investors to assist in their understanding of the effect of the Company's organizational structure on its reported results and also in comparing the Company's results across different periods.
This release also presents Adjusted EBITDA, as defined by the Company as the income before income taxes, interest income, interest expense, depreciation, amortization and other adjustments noted in the table below.
Adjusted EBITDA, adjusted pro forma net income and adjusted pro forma net income per share, however, do not represent and should not be considered as an alternative to net income, net income per share or cash flow from operating activities, as determined in accordance with GAAP, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies.
This press release contains forward-looking statements, including the information presented above under the caption "Fiscal 2011 Guidance" which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "projects", "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described under "Risk Factors" in our Annual Report on Form 10-K, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Annual Report on Form 10-K and other filings. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. In addition, our expectations with respect to net sales, Adjusted EBITDA and adjusted pro forma net income per share for fiscal year 2011 reflect an assumption that our revenues for the fourth quarter of fiscal year 2011 will decrease between 4% and 11% as compared to the fourth quarter of fiscal year 2010. Our actual results for fiscal year 2011 may differ from current expectations if these assumptions prove inaccurate due to continued deterioration in the funding environment or otherwise.
About DynaVox Inc.
DynaVox Inc. (Nasdaq:DVOX) is a publicly traded holding Company with its headquarters in Pittsburgh, Pennsylvania, whose primary operating entities are DynaVox Systems LLC and Mayer-Johnson LLC. DynaVox is the leading provider of speech generating devices and symbol-adapted special education software used to assist individuals in overcoming their speech, language and learning challenges. These solutions are designed to help individuals who have complex communication and learning needs participate in the home, classroom and community. Our mission is to enable our customers to realize their full communication and education potential by developing industry-leading devices, software and content and by providing the services to support them. We assist individuals, families, and professionals with an extensive field support organization, as well as centralized technical and reimbursement support. For more information, visit .
DYNAVOX INC. AND SUBSIDIARIES
CONTACT: News Media Contact: DynaVox Joanne Kaufmann Communications Manager (412) 222-7837 Investor Contact: ICR, LLC Sherry Bertner Managing Director (646) 277-1247