Total Company First Nine Months Net Sales of $28.4 million
Surfersvillage Global Surf News, 6 November, 2014 - Carlsbad - Spy announced financial results for the three and nine months ended September 30, 2014. Third quarter sales were $11.0 million in 2014, an increase of 8.1% or $0.8 million more than in the third quarter of 2013. The increase in our net sales was primarily driven by strong goggle sales and continued growth in our prescription frames.
Gross profit as a percentage of net sales was 49.2% for the three months ended September 30, 2014, compared to 48.5% for the three months ended September 30, 2013.
First nine month sales were $28.4 million in 2014, a decrease of 2.7% or $0.8 million less than in the first nine months of 2013. Sales included lower closeout sales of $1.2 million in 2014, compared to $2.0 million in 2013. The decrease in our net sales was primarily driven by an overall decline in the consumer market coupled with several key retailers currently holding lower levels of inventory and fewer closeout sales of our sunglass products. Gross profit as a percentage of net sales was 51.9% for the nine months ended September 30, 2014, compared to 50.8% for the nine months ended September 30, 2013.
“In third quarter, we were happy to get back into our positive sales trend with growth in the quarter in four of our five major categories; RX, moto goggles, snow goggles and sunglasses,” said Michael Marckx, president and CEO. “In addition, the continued margin expansion is a direct result of the strategic product sourcing initiatives and our brand’s more premium positioning.
"We achieved a solid operating profit margin along with a very successful launch of our new snow goggle line, including the launch of our proprietary Happy Lens™ in the snow category, which positions us well for the final quarter of 2014. In Q4, we will focus on fulfilling snow goggle orders, further expanding our Happy Lens offering, driving our sales growth, improving our product margins and launching our 2015 product line.”
Income from operations increased by $0.1 million to $0.6 million in the third quarter of 2014, compared to income from operations of approximately $0.5 million in the third quarter of 2013. The $0.1 million increase was partially due to the increase in sales and a 70 basis point improvement in gross profit as a percent of sales. Additionally, total operating expenses in the third quarter of 2014 were higher by $0.3 million, compared to the third quarter of 2013.
Income from operations remained constant and was $0.8 million and $0.8 million for the nine months ended in 2014 and 2013. Although sales decreased it was offset with a 110 basis point improvement in gross profit as a percent of sales. Additionally, total operating expenses in the first nine months of 2014 were lower by $0.1 million, compared to the same period in 2013. Cash flow used in operating activities was less than $0.1 million in the first nine months of 2014.
The Company incurred a net loss of less than $0.1 million and $0.3 million during the third quarter of 2014 and 2013, respectively. The Company incurred a net loss of $1.5 million and $1.6 million during the first nine months of 2014 and 2013, respectively.
SPY Inc. invites you to join the investor conference call on November 4, 2014, at 1:30 p.m. PST. The dial-in number for the call in North America is 1-877-703-6105 and 1-857-244-7304 for international callers. The participant pass code is 73675276. The call will also be webcast live on the internet and can be accessed by logging on at investor.spyoptic.com.
The results of our operations for the quarters ended September 30, 2014 and 2013 are more fully discussed in our Form 10-Q for the quarter ended September 30, 2014, filed with the Securities and Exchange Commission on November 4, 2014.