Breaking News

Tweet TWEET

Steinway Reports 1Q 2013 Sales of $77 Million and EPS of $0.21

        Steinway Reports 1Q 2013 Sales of $77 Million and EPS of $0.21

-- EPS increases fourfold; EBITDA up 85%

-- Sale of West 57th Street property on track for 2Q

-- Production capabilities increasing in Europe

-- Strong outlook for full year 2013

PR Newswire

WALTHAM, Mass., May 8, 2013

WALTHAM, Mass., May 8, 2013 /PRNewswire/ --Steinway Musical Instruments, Inc.
(NYSE: LVB) today announced its financial results for the first quarter ended
March 31, 2013.

Net sales for the first quarter of 2013 totaled $76.8 million compared to net
sales of $78.0 million for the first quarter of 2012. The Company reported
net income of $2.7 million, or $0.21 per diluted share, for the 2013 period
compared to $0.6 million, or $0.05 per diluted share, for the prior-year
period.

CEO Michael Sweeney commented, "Our first-quarter results demonstrate
significant improvement in our profitability profile. Overall, our gross
margin jumped 330 basis points while EPS rose fourfold. Our band division
turned in an outstanding operating performance, with gross profit up more than
16%. While we posted a slight decrease in total revenue as compared to the
prior-year period, we are confident that the robust U.S. piano sales we saw
this quarter will continue and that our strong order position in Europe and
Asia will contribute to solid results for the year overall.

"As announced in March, we entered into an agreement with JDS Development
Group to sell our interest in the Steinway Hall building on West 57^th Street
in New York City for $46 million, subject to an upward adjustment associated
with certain post-closing conditions. We expect the transaction to close
during the second quarter, enabling us to recognize a taxable gain of
approximately $22 million. The sale will strengthen our already healthy
balance sheet, opening up many options to enhance our capital structure, and
will enable us to focus all our attention on growing our musical instruments
business."

Piano Operations
First quarter revenue totaled $45.4 million, a 2.9% increase over the
prior-year quarter. A 13.5% increase in unit shipments of Steinway grand
pianos in the Americas was offset by lower shipments in our European and
Asia-Pacific regions, resulting in a 4.5% decrease as compared to the year-ago
period. Worldwide, unit shipments of Boston and Essex pianos rose 23.3% over
the first quarter of 2012. Gross margin improved 100 basis points despite
increased training costs for new production workers in Germany.

Band Operations
Revenues for the first quarter totaled $31.4 million, a decrease of 7.2% from
the prior-year period, due to lower overall shipments. As compared to the
prior-year quarter, the mix of products sold shifted toward professional
instruments and sourced student instruments. Sales of these higher-margin
instruments, coupled with price increases, led to exceptional gross margin
improvement of 600 basis points over the first quarter of 2012.

Outlook
Mr. Sweeney concluded, "We see an exciting path to growth for our Company. The
steps we took in mid-2012 to ramp up Steinway grand piano production will soon
enable us to realize even more fully the operating leverage inherent in our
business. We increased our German production workforce by almost 20% over the
last 12 months and will finish training the new workers by June. These
expanded capabilities will enable us to fulfill orders for Steinway grand
pianos in Europe and Asia in the second half of 2013. At our band division, we
expect a pick-up in orders and deliveries as we enter the peak selling season
and dealers have more visibility into their customers' needs. We expect to
benefit from the higher profitability that even a modest improvement in band
revenue produces."

Capitalization
As of March 31, 2013, the Company's cash balance totaled $61.7 million. The
Company's West 57^th Street building and its related assets and liabilities
were reclassified as current due to the pending sale of the building.

Conference Call
Management will hold a conference call and webcast to review and discuss the
Company's results. Details are as follows:

What:       Steinway Musical Instruments, Inc. Q1 2013 Financial Results
            Conference Call
When:       Wednesday, May 8, 2013
Time:       5:00 p.m. EDT
Live Call:  (888) 771-4371, passcode 34754868 -- domestic
            (847) 585-4405, passcode 34754868 -- domestic / international
Replay:     (888) 843-7419, passcode 34754868# -- domestic
            (630) 652-3042, passcode 34754868# -- domestic / international
Webcast:    www.steinwaymusical.com/investorrelations (live and replay)

The telephone replay will be available on May 8, 2013 beginning at 7:15 p.m.
EDT until May 15, 2013 at 11:59 p.m. EDT. The webcast replay can be accessed
in the Audio Archive section of the Company's Investor Relations website.

About Steinway Musical Instruments
Steinway Musical Instruments, Inc., through its Steinway and Conn-Selmer
divisions, is a global leader in the design, manufacture, marketing and
distribution of high quality musical instruments. These products include Bach
Stradivarius trumpets, Selmer Paris saxophones, C.G.Conn French horns,
Leblanc clarinets, King trombones, Ludwig snare drums and Steinway& Sons
pianos. Through its online music retailer, ArkivMusic, the Company also
produces and distributes classical music recordings. For more information
about Steinway Musical Instruments,Inc. please visit the Company's website at
www.steinwaymusical.com.

Non-GAAP Financial Measures Used by Steinway Musical Instruments
The Company uses the non-GAAP measurement Adjusted EBITDA, which it defines as
earnings before net interest expense, income taxes, depreciation and
amortization, adjusted to exclude non-recurring, infrequent, or unusual items
(if any). The Company uses Adjusted EBITDA because it is useful to management
and investors as a measure of the Company's core operating performance in that
it eliminates the impact of items that are unrelated to how well the Company
is completing its manufacturing and operating responsibilities. In addition,
the Company uses Adjusted EBITDA as the basis for determining bonuses for its
managers. The Company also believes Adjusted EBITDA is helpful in determining
the Company's ability to meet future debt service, capital expenditures and
working capital requirements as it factors out non-cash expenses such as
depreciation, amortization, and impairment charges.

Accordingly, Adjusted EBITDA should be used as a supplement to the comparable
GAAP measures and should not be construed as a substitute for income from
operations or net income, or a better indicator of liquidity than cash flows
from operating activities, which are determined in accordance with GAAP.

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995
This release contains "forward-looking statements" which represent the
Company's present expectations or beliefs concerning future events. The
Company cautions that such statements are necessarily based on certain
assumptions which are subject to risks and uncertainties which could cause
actual results to differ materially from those indicated in this release.
These risk factors include the following: changes in general economic
conditions; reductions in school budgets; increased competition; exchange rate
fluctuations; variations in the mix of products sold; market acceptance of new
products; ability of suppliers to meet demand; concentration of credit risk;
ability to fulfill piano orders in a timely manner; failure to consummate the
sale of the West 57^th Street building; and fluctuations in effective tax
rates resulting from shifts in sources of income. Further information on these
risk factors is included in the Company's filings with the Securities and
Exchange Commission.

Company Contact:
Julie A. Theriault
Steinway Musical Instruments, Inc.
(781) 894-9770
ir@steinwaymusical.com

Investor Relations Contact:
Harriet Fried / Jody Burfening
LHA
(212) 838-3777
hfried@lhai.com



STEINWAY MUSICAL INSTRUMENTS, INC.
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
(Unaudited)
                                                Three Months Ended
                                                3/31/2013       3/31/2012
Net sales                                       $   76,803    $   77,953
Cost of sales                                   51,453          54,806
Gross profit                                    25,350          23,147
                                                33.0%           29.7%
Operating expenses:
Sales and marketing                             11,280          11,985
General and administrative                      8,470           8,961
Other                                           19              38
Total operating expenses                        19,769          20,984
Income from operations                          5,581           2,163
Other (income) expense, net                     401             354
Interest expense, net                           917             850
Income before income taxes                      4,263           959
Income tax provision                            1,573           369
Net income                                      $    2,690   $     590
Earnings per share - basic                      $0.22           $0.05
Earnings per share - diluted                    $0.21           $0.05
Weighted average common shares                  12,459          12,368
- basic
Weighted average common shares                  12,540          12,506
- diluted
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
                                  3/31/2013     3/31/2012       12/31/2012
Cash                              $   61,724  $   43,668    $   73,406
Receivables, net                  40,282        42,491          43,536
Inventories, net                  130,434       138,169         125,081
Other current assets              40,680        26,080          14,309
Total current assets              273,120       250,408         256,332
Property, plant and equipment,    67,225        88,455          91,485
net
Other assets                      76,513        73,151          77,850
Total assets                      $  416,858   $  412,014     $  425,667
Debt                              $   67,978  $     604  $     576
Other current liabilities         47,461        47,696          53,042
Total current liabilities         115,439       48,300          53,618
Long-term debt                    -             70,383          67,431
Other liabilities                 59,352        58,993          62,773
Stockholders' equity              242,067       234,338         241,845
Total liabilities and             $  416,858   $  412,014     $  425,667
stockholders' equity



STEINWAY MUSICAL INSTRUMENTS, INC.
(In Thousands)
(Unaudited)
Reconciliation from Cash Flows from Operating Activities to Adjusted EBITDA
                                               Three Months Ended
                                               3/31/2013       3/31/2012
Cash flows from operating activities           $   (9,871)  $   (7,720)
Changes in operating assets and liabilities    15,490          11,099
Stock-based compensation expense               (96)            (111)
Income tax provision, net of deferreds         1,476           445
Net interest expense                           917             850
Provision for doubtful accounts                (246)           (688)
Other                                          (152)           197
Adjusted EBITDA                                $    7,518  $    4,072
Reconciliation from Net Income to Adjusted EBITDA
                                               Three Months Ended
                                               3/31/2013       3/31/2012
Net income                                     $    2,690  $      590
Income tax provision                           1,573           369
Net interest expense                           917             850
Depreciation                                   2,075           2,001
Amortization                                   263             262
Adjusted EBITDA                                $    7,518  $    4,072



SOURCE Steinway Musical Instruments, Inc.

Website: http://www.steinwaymusical.com
 
Press spacebar to pause and continue. Press esc to stop.