News
Steinway announces Q3 increase
Rob Hughes Nov 18 2008, 5:27pm
Decrease in band segment revenue offset
US-based MMR Magazine reports that Steinway has announced revenues for the third quarter increased one per cent over the same period in the prior year.
A seven per cent increase in piano segment revenues, which includes the company's recently acquired online music business, more than offset a five per cent decrease in band segment revenues. Overall gross margins improved to 29.8 per cent from 28.3 per cent.
In the third quarter the band segment recorded a non-cash charge of US$8.6 million, impacting after tax earnings by US$0.60 per diluted share. Controllable operating expenses were flat with the prior year period but the negative impact of the impairment charge caused a US$6.6 million decline in operating income for the quarter. Net interest expense decreased 18 per cent as a result of lower borrowings during the third quarter of 2008.
"Given the state of the global economy, we are pleased with our third quarter results," said CEO Dana Messina. "We saw significant improvement in adjusted EBITDA in both the band and piano segments."
Adjusted EBITDA improved to $12.2 million, or 25 percent, over the prior year period. The company posted a loss per share of $0.03 and adjusted earnings per share of $0.57 compared to earnings per share of $0.35 in the third quarter of 2007. Adjustments for the quarter are detailed in the attached financial tables.
For the first nine months of 2008, revenue increased three per cent and gross margins improved slightly, to 29.5 per cent from 29.4 per cent. Operating income declined US$7.4 million as a result of the charge to goodwill. Adjusted EBITDA improved to US$31.4 million, or 14 per cent, reflecting improvement in both the band and piano segments.
In the third quarter, band revenues decreased US$2.5 million, or five per cent, despite a unit sales decline of 15 per cent.
Declines occurred in all major product categories, with the most significant shortfall in student-level instruments. Gross margins improved from 19.5 per cent to 23.2 per cent as a result of a change in product mix toward higher priced instruments, reduced sales incentive programs, and greater manufacturing efficiencies.
For the nine-month period, band sales were nearly equal to the prior year period. Gross margins improved from 20.7 per cent to 22.2 per cent, despite US$0.9 million of severance costs during the period.
Piano segment revenues for the third quarter increased US$3.7 million, or seven per cent, to US$55.7 million. An increase in piano sales overseas offset a domestic decline while online music sales contributed an additional US$1.8 million in revenue during the quarter. Overall unit shipments of Steinway grand pianos decreased five per cent from the prior year period. Domestic shipments of Steinway grand pianos decreased six per cent, and overseas shipments decreased three percent. Unit shipments of mid-priced pianos declined seven per cent. Gross margins declined from 36.3 per cent to 35.1 per cent due to a decline in domestic retail sales and a change in product mix toward lower margin upright pianos.
For the nine-month period, piano revenues increased five per cent. Steinway grand unit shipments declined six per cent and mid-priced piano unit shipments decreased two percent. Gross margins decreased to 34.8 per cent from 36.3 per cent primarily as a result of lower production levels at the New York piano plant.
mmrmagazine.com
steinway.com
