- Net Sales Up 11% to $1.6
Billion
- Operational EBITDA and EPS Up 26%
and 11%, Respectively
- Secured $1.5 Billion in New
Automotive Awards; $3.5 Billion Year-to-Date
- Adjusts FY 2016 Guidance
HARMAN International Industries, Incorporated (NYSE:HAR), the
premier connected technologies company for automotive, consumer and
enterprise markets, today announced results for the third quarter
ended March 31, 2016.
This Smart News Release features multimedia.
View the full release here:
http://www.businesswire.com/news/home/20160428005568/en/
Net sales for the third quarter were $1.6 billion, an increase
of 11 percent compared to the prior year or 12 percent excluding
the impact of foreign currency translation (ex-FX). Connected Car
net sales increased five percent (six percent ex-FX) primarily due
to higher take rates. Lifestyle Audio net sales increased 11
percent (12 percent ex-FX) due to the acquisition of Bang &
Olufsen Automotive, higher car audio take rates and higher consumer
audio sales. Net sales in Professional Solutions decreased four
percent (three percent ex-FX) mainly due to lower demand in Brazil
and certain European markets, as well as channel rationalization to
support a solutions-based go-to-market structure. Connected
Services net sales were $166 million compared to $67 million in the
prior year, primarily due to the expansion of the Company’s
services portfolio as a result of the acquisition of Symphony
Teleca (STC).
On a GAAP basis, third quarter operating income increased 48
percent to $135 million compared to $92 million in the prior year
and EBITDA increased 41 percent to $186 million compared to $132
million in the prior year. Earnings per diluted share increased 23
percent to $1.22 compared to $0.99 in the prior year. The Company
recorded $13 million of restructuring, non-recurring charges and
acquisition-related items compared to $23 million in the prior
year. The decrease was primarily due to lower restructuring costs
compared to the prior year.
Excluding restructuring, non-recurring charges and
acquisition-related items, third quarter operating income increased
30 percent to $148 million compared to $114 million in the prior
year, and EBITDA increased 26 percent to $189 million compared to
$150 million in the prior year. Earnings per diluted share were
$1.36 compared to $1.22 in the prior year.
“For the 12th consecutive quarter, HARMAN has delivered top and
bottom line growth, and in the quarter, we grew EBITDA 26 percent
year-over-year. Our Connected Car and Lifestyle Audio divisions,
which represent approximately 75 percent of our revenue, continue
to deliver strong results. In our Professional Solutions division,
we are taking decisive actions to improve performance and better
position HARMAN for growth,” said Dinesh C. Paliwal, the Company’s
Chairman, President and CEO.
“HARMAN is capitalizing on the robust demand for seamless,
secure connectivity across the full vehicle market. On top of the
record $6.2 billion in automotive awards we announced in fiscal
2015, I am very pleased with the additional $3.5 billion of new
automotive awards secured year-to-date, including a breakthrough
display audio infotainment award.”
FY 2016 Key Figures –
Total Company Three Months Ended March
31 Nine Months Ended March 31
Increase(Decrease)
Increase(Decrease)
$ millions (except per share
data)
3M FY16 3M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
9M FY16 9M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
Net sales
1,628 1,464 11%
12% 5,031 4,477
12% 18% Gross profit 493
418 18% 19%
1,525 1,326 15% 20%
Percent of net sales 30.3% 28.6%
30.3%
29.6%
SG&A 358 327
9% 11% 1,099 970
13% 18% Operating income
135 92 48% 48%
426 356 20% 23%
Percent of net sales 8.3% 6.2%
8.5%
8.0% EBITDA
186 132 41%
42% 592 471 26%
30% Percent of net sales 11.4%
9.0%
11.8% 10.5%
Net Income attributable to HARMAN International Industries,
Incorporated 89 70
26% 25% 289 270
7% 10% Diluted earnings per share
1.22 0.99 23%
22% 3.98 3.83 4%
7% Restructuring & non-recurring costs
12 13
32 32
Acquisition-related items
1 10
34 15
Non-GAAP -
operational1
Gross profit
495 422 17%
18% 1,531 1,318
16% 21% Percent of net sales
30.4% 28.8%
30.4% 29.4%
SG&A 347 308
13% 14% 1,038
914 14% 18% Operating income
148 114 30%
30% 492 404 22%
27% Percent of net sales 9.1%
7.8%
9.8% 9.0%
EBITDA 189 150
26% 27% 611 511
19% 24% Percent of net sales
11.6% 10.2%
12.1% 11.4%
Net Income attributable to HARMAN
International Industries, Incorporated 99
87 14% 13%
340 305 12% 16% Diluted
earnings per share 1.36 1.22
11% 10% 4.69
4.33 8% 12% Shares outstanding –
diluted (in millions) 73 71
73
70 1 A non-GAAP
measure, see reconciliations of non-GAAP measures later in this
release.
Summary of Operations – Gross Margin and SG&A
(Non-GAAP)
Gross margin for the third quarter of fiscal year 2016 increased
160 basis points to 30.4 percent. The improvement was primarily due
to the impact of higher sales volume leveraging a more efficient
fixed production cost base and productivity initiatives.
In the third quarter of fiscal year 2016, SG&A expense as a
percentage of net sales increased 30 basis points to 21.3 percent
compared to 21.0 percent in the prior year due to higher selling
and marketing expenses.
2016 Guidance Update
HARMAN updated its financial outlook for fiscal 2016. The
Company now forecasts fiscal 2016 revenue of approximately $6.825
billion and operational earnings per share of $6.20. The majority
of the revenue and EPS reduction is related to weakness in the
Professional Solutions division as well as supply constraints as a
result of the recent earthquakes in Japan.
August 2015 April 20161 Revenue
~$7.0 billion ~$6.825 billion EPS2
~$6.50
~$6.20
1. Includes the previously announced $0.05
reduction for the impact of the TowerSec acquisition.
2. Non-GAAP, excluding restructuring, non-recurring items, and
purchase accounting expenses related to acquisitions.
Investor Call Today April 28, 2016
At 11:00 a.m. EDT today, HARMAN’s management will host an
analyst and investor conference call to discuss the third quarter
results. Those who wish to participate via audio in the earnings
conference call should dial 1 (888) 224-7971 (U.S.) or +1 (303)
223-2684 (International) ten minutes before the call and reference
HARMAN, Access Code: 21809222.
In addition, HARMAN invites you to visit the Investors section
of its website at: www.harman.com where visitors can sign-up for
email alerts and conveniently download copies of historical
earnings releases and supporting slide presentations, among other
documents. The fiscal third quarter earnings release and supporting
materials were posted on the site at approximately 8:00 a.m. EDT
today.
A replay of the call will also be available following its
completion at approximately 1:00 p.m. EDT. The replay will be
available through Friday, July 29, 2016 at 1:00 p.m. EDT. To listen
to the replay, dial 1 (800) 633-8284 (U.S.) or +1 (402) 977-9140
(International), Access Code: 21809222. If you need technical
assistance, call the toll-free Global Crossing Customer Care Line
at 1 (800) 473-0602 (U.S.) or +1 (303) 446-4604
(International).
General Information
HARMAN (harman.com) designs and engineers connected
products and solutions for automakers, consumers, and
enterprises worldwide, including connected car systems, audio and
visual products, enterprise automation solutions; and connected
services. With leading brands including AKG®, Harman Kardon®,
Infinity®, JBL®, Lexicon®, Mark Levinson® and Revel®, HARMAN is
admired by audiophiles, musicians and the entertainment venues
where they perform around the world. More than 25 million
automobiles on the road today are equipped with HARMAN audio and
connected car systems. The Company’s software services power
billions of mobile devices and systems that are connected,
integrated and secure across all platforms, from work and home to
car and mobile. HARMAN has a workforce of approximately 29,000
people across the Americas, Europe, and Asia and reported sales of
$6.7 billion during the 12 months ended March 31, 2016. The
Company’s shares are traded on the New York Stock Exchange under
the symbol NYSE:HAR.
A reconciliation of the non-GAAP measures included in this press
release to the most comparable GAAP measures is provided in the
tables contained at the end of this press release. HARMAN does not
intend for this information to be considered in isolation or as a
substitute for other measures prepared in accordance with GAAP.
Forward-Looking Information
Except for historical information contained herein, the matters
discussed in this earnings presentation are forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. One should not place undue
reliance on these statements. The Company bases these statements on
particular assumptions that it has made in light of its industry
experience, as well as its perception of historical trends, current
market conditions, current economic data, expected future
developments and other factors that the Company believes are
appropriate under the circumstances. These statements involve
risks, uncertainties and assumptions that could cause actual
results to differ materially from those suggested in the
forward-looking statements, including but not limited to: (1) the
Company’s ability to maintain profitability if there are delays in
its product launches or increased pricing pressure from its
customers; (2) the loss of one or more significant customers, the
loss of a significant platform with an automotive customer or the
in-sourcing of certain services by the Company’s automotive
customers; (3) fluctuations in currency exchange rates,
particularly with respect to the value of the U.S. Dollar and
the Euro; (4) fluctuations in the price and supply of raw materials
including, without limitation, petroleum, copper, steel, aluminum,
synthetic resins, rare metals and rare-earth minerals, or shortages
of materials, parts and components; (5) the inability of the
Company’s suppliers to deliver products at the scheduled rate and
disruptions arising in connection therewith; (6) the Company’s
ability to maintain a competitive technological advantage through
innovation and leading product designs; (7) the Company’s ability
to integrate successfully its recently completed and future
acquisitions; (8) the Company’s ability to attract and retain
qualified senior management and to prepare and implement an
appropriate succession plan for its critical organizational
positions; (9) the Company’s failure to maintain the value of its
brands and implementing a sufficient brand protection program; and
(10) other risks detailed in the Harman International Industries,
Incorporated Annual Report on Form 10-K for the fiscal year ended
June 30, 2015 and other filings made by the Company with the
Securities and Exchange Commission. The Company undertakes no
obligation to publicly update or revise any forward-looking
statement except as required by law.
This earnings release also makes reference to the Company’s
awarded business or “backlog”, which represents the estimated
future lifetime net sales for all customers. The Company's future
awarded business does not represent firm customer orders. The
Company reports its awarded business primarily based on written
award letters. To validate these awards, the Company uses various
assumptions including global vehicle production forecasts, customer
take rates for the Company’s products, revisions to product life
cycle estimates and the impact of annual price reductions and
exchange rates, among other factors. These assumptions are updated
and reported externally on an annual basis.
APPENDIX
Connected Car
FY 2016 Key Figures –
Connected Car Three Months Ended March
31 Nine Months Ended March 31
Increase (Decrease)
Increase (Decrease)
$ millions (except per share data)
3M FY16
3M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
9M FY16 9M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
Net sales
767 730 5%
6% 2,259 2,153 5%
11% Gross profit 202
164 23% 23% 562
503 12% 17% Percent of
net sales 26.3% 22.5%
24.9%
23.4% SG&A
106 91 17%
18% 295 280 5%
13% Operating income 96
74 30% 29% 267
223 20% 22% Percent of
net sales 12.5% 10.1%
11.8%
10.4% EBITDA
115 91 27%
27% 324 275 18%
21% Percent of net sales 15.0%
12.4%
14.4% 12.8%
Restructuring & non-recurring costs
2 1
5 5
Acquisition-related items 1
- 3
-
Non-GAAP -
operational1
Gross profit
203 165 23%
23% 566 507 12%
17% Percent of net sales 26.4%
22.7%
25.0% 23.6%
SG&A 104 91
14% 16% 291
279 4% 12% Operating income
98 74 32%
31% 275 228 20%
23% Percent of net sales 12.8%
10.2%
12.2% 10.6%
EBITDA 116 90
29% 28% 326 276
18% 21% Percent of net sales
15.2% 12.3%
14.4% 12.8%
1 A non-GAAP measure, see
reconciliations of non-GAAP measures later in this release.
Net sales in the third quarter of fiscal 2016 were $767 million,
an increase of five percent (six percent ex-FX) compared to the
prior year. The increase in net sales was due to higher take
rates.
On a non-GAAP basis in the third quarter of fiscal 2016, gross
margin increased 370 basis points to 26.4 percent compared to the
prior year primarily due to the impact of higher sales volume
leveraging a more efficient fixed production cost base, lower
warranty costs and supplier productivity. SG&A expenses as a
percent of sales increased 110 basis points to 13.6 percent
compared to the prior year due to higher information technology
costs to support future business.
Connected Car Highlights
HARMAN continues to expand and diversify its Connected Car
offerings with global automakers. The Company secured embedded
infotainment business with a new North American customer to provide
a display audio solution across multiple car lines. HARMAN won a
global expansion award from a European OEM to support higher take
rates, as well a platform refresh for 2017 vehicles. In addition,
the Company received a follow-on award to expand the next
generation integrated telematics program for Daimler.
HARMAN launched embedded infotainment solutions in a number of
new vehicles, including the Audi Q2 crossover, the Seat (VW) Alteca
SUV and Maserati (FCA) Levante supercar. In Japan, HARMAN
launched an embedded infotainment system featuring Apple CarPlay on
the new Suzuki Ignis. The Company also launched model refreshes and
line extensions featuring its embedded infotainment solutions in
the Porsche Macan, 911, and 718 Boxster, as well as the Mercedes
Benz C-class convertible, GLC Coupe and AMG GLC43.
HARMAN continued to reinforce its leadership in technology
innovations that advance connectivity, driver safety, and
autonomous driving. During the Geneva Motor Show, HARMAN
demonstrated its full suite of connected car technologies through
the LIVS (Life-enhancing Intelligent Vehicle System) automotive
compute platform. The Company also expanded its partnership with
NXP to add V2X support, which allows ADAS alerts to be delivered to
vehicles from other cars and surrounding infrastructure to warn
drivers about potentially hazardous traffic situations.
In March, HARMAN completed the acquisition of TowerSec, a
leading global provider of automotive cybersecurity
solutions. TowerSec’s products, featuring intrusion detection
and prevention systems as well as secure telematics offerings, will
be integrated into HARMAN’s “5+1” cybersecurity framework.
Lifestyle Audio
FY 2016 Key
Figures – Lifestyle Audio Three Months
Ended March 31 Nine Months Ended March
31
Increase(Decrease)
Increase(Decrease)
$ millions (except
per share data)
3M FY16
3M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
9M FY16
9M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
Net sales
473 424 11%
12% 1,560
1,350 16% 20% Gross
profit 167 133
26% 27% 522
442 18%
22% Percent of net sales 35.4%
31.3%
33.5% 32.8%
SG&A
107 88
21% 22% 331
294 13% 18%
Operating income 61 45
36% 37%
191 148 29%
30% Percent of net sales 12.8%
10.5%
12.3%
11.0%
EBITDA 74 56
33% 34%
232 178 30%
32% Percent of net sales 15.7%
13.2%
14.9%
13.2%
Restructuring & non-recurring costs
1 7
7 19
Acquisition-related items 2
1
12 4
Non-GAAP -
operational1
Gross profit
168 135 24%
25% 523 434
21% 25% Percent of net
sales 35.5% 31.8%
33.5% 32.1%
SG&A 104
83 26%
27% 314 262
20% 24% Operating income
64 52 23%
23% 210
172 22% 26%
Percent of net sales 13.5%
12.3%
13.4% 12.7%
EBITDA
72 61 18%
19% 235
199 18% 21%
Percent of net sales 15.3%
14.4%
15.1% 14.7%
1 A non-GAAP
measure, see reconciliations of non-GAAP measures later in this
release.
Net sales in the third quarter of fiscal 2016 were $473 million,
an increase of 11 percent (12 percent ex-FX) compared to the prior
year primarily due to the acquisition of Bang & Olufsen
Automotive, higher car audio take rates and higher consumer audio
sales.
On a non-GAAP basis in the third quarter of fiscal 2016, gross
margin improved by 370 basis points to 35.5 percent compared to the
prior year, primarily due to improved operating leverage as a
result of higher sales volume, the acquisition of Bang &
Olufsen Automotive and supplier productivity. SG&A expenses as
a percentage of sales increased 250 basis points to 22.0 percent
primarily due to higher research and development to support new car
audio awards.
Lifestyle Audio Highlights
HARMAN won new business awards with Lincoln, Toyota and Subaru.
During the quarter, the Company launched branded car audio
solutions in the Maserati Levante (Harman Kardon / Bowers &
Wilkins), the Lincoln MKZ (Revel), the new Alfa Romeo Giulia
(Harman Kardon) and the Ferrari GTC 4 Lusso (JBL Pro).
HARMAN inaugurated a new global development center in Suzhou,
China. The center is now the Company’s largest comprehensive
research and development center for car audio products
worldwide.
The Company entered into a multi-year agreement with Lufthansa
to supply award-winning AKG branded active noise cancelling
headphones for all business class seats beginning in September
2016. This quarter, HARMAN’s Consumer Audio products were again
recognized for their design and innovation, winning a record 23 Red
Dot awards.
Professional Solutions
FY 2016 Key
Figures – Professional Solutions Three
Months Ended March 31 Nine Months Ended
March 31
Increase(Decrease)
Increase(Decrease)
$ millions (except per
share data)
3M FY16
3M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
9M FY16
9M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
Net sales
232 242 (4%)
(3%) 728
764 (5%) (2%)
Gross profit 78 100
(23%) (22%)
283 315 (10%)
(8%) Percent of net sales
33.5% 41.5%
38.9%
41.3%
SG&A 75 84
(11%) (10%)
231 240 (4%)
(1%) Operating income 3
16 (83%)
(83%) 52 75
(30%) (28%) Percent of net sales
1.1% 6.6%
7.2%
9.8%
EBITDA 12
24 (52%) (51%)
79 100
(21%) (19%) Percent of net sales
5.0% 10.0%
10.8%
13.1%
Restructuring & non-recurring costs
4 6
11 8
Non-GAAP -
operational1
Gross profit
78 101 (22%)
(21%) 284
312 (9%) (6%)
Percent of net sales 33.7%
41.5%
39.0% 40.8%
SG&A
71 79 (10%)
(9%) 220
229 (4%) (1%)
Operating income 7 22
(67%) (67%)
64 83 (23%)
(21%) Percent of net sales 3.1%
9.0%
8.7% 10.9%
EBITDA
15 30
(48%) (48%) 88
108 (18%)
(16%) Percent of net sales 6.6%
12.3%
12.1% 14.1%
1 A
non-GAAP measure, see reconciliations of non-GAAP measures later in
this release.
Net sales in the third quarter of fiscal 2016 were $232 million,
a decrease of four percent (a decrease of three percent ex-FX)
compared to the prior year. The decrease in net sales is primarily
due to lower demand in Brazil and certain European markets, as well
as channel rationalization to support a solutions-based
go-to-market structure.
On a non-GAAP basis in the third quarter of fiscal 2016, gross
margin decreased 780 basis points to 33.7 percent, driven by
discounts on older inventory and to partially offset foreign
currency impacts. In addition, the Company incurred incremental
costs associated with migrating manufacturing to Hungary and
reduced operating leverage as a result of lower sales. SG&A
expense as a percentage of sales decreased 190 basis points to 30.6
percent compared to 32.5 percent in the prior year, driven by
tighter expense controls.
Professional Solutions Highlights
HARMAN’s entertainment and enterprise solutions were selected by
leading system integrators and installers around the world. Notable
installations included Norwegian Cruise Line’s The Pride of America
and Raymond James Stadium in Tampa Bay. The Company’s enterprise
solutions were installed in meeting rooms across the globe for
customers including eBay and Societe Generale. The Company’s
solutions also powered a wide range of high-profile special events,
music festivals and televised award shows, including the Super Bowl
50 Halftime Show and the 58th Annual Grammy Awards.
Connected Services
FY 2016 Key
Figures – Connected Services Three
Months Ended March 31 Nine Months Ended
March 31
Increase (Decrease)
Increase(Decrease)
$ millions (except per
share data)
3M FY16
3M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
9M FY16
9M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
Net sales
166 67 147%
159% 509
208 144% 177% Gross
profit 48 21
131% 138%
162 63 155%
184% Percent of net sales 28.7%
30.7%
31.7% 30.4%
SG&A
36 14
150% 157% 140
36 283%
314% Operating income 12
6 87% 96%
22 27 (19%)
(6%) Percent of net sales
7.1% 9.4%
4.3%
12.9%
EBITDA 18 8
135% 146% 57
29 94%
125% Percent of net sales 11.0%
11.6%
11.2% 14.1%
Restructuring & non-recurring costs 3
-
8 -
Acquisition-related items (1)
-
22 -
Non-GAAP -
operational1
Gross profit
48 21 131%
138% 162 63
155% 184% Percent of net
sales 28.7% 30.7%
31.7% 30.4%
SG&A 34
14 135%
142% 109 36
199% 224% Operating income
14 6 121%
131% 52
27 94% 125%
Percent of net sales 8.4%
9.4%
10.3% 12.9%
EBITDA 18
8 132%
143% 63 29
115% 148% Percent of net sales
10.9% 11.6%
12.4% 14.1%
1 A non-GAAP measure, see reconciliations of
non-GAAP measures later in this release.
Net sales in the third quarter of fiscal 2016 were $166 million
compared to $67 million in the prior year, driven primarily by the
expansion of the Company’s services portfolio. On a non-GAAP basis,
gross margin was 28.7 percent and SG&A expenses as a percentage
of sales were 20.3 percent.
Connected Services Highlights
HARMAN secured business to provide product development services
for Blackberry, British Telecom, Intel and Sony, among others. In
addition, the Company continued to capitalize on its
industry-leading over-the-air (OTA) software update technology,
winning a cross-car line award with a global automaker. Over the
air updates are the foundation technology for the connected car,
allowing automakers to quickly enable new features, fix bugs,
upgrade firmware, and offer a rich suite of end-to-end
services.
In conjunction with the HARMAN Service Delivery Platform, the
Company introduced its Automotive Service Provider Program. The
program facilitates the integration of a variety of enterprise and
vehicle-centric applications and services from leading providers.
HARMAN added 10 new data, workflow and content service providers
for its open platform, which enables automakers to provide a wide
range of context-based services, including real-time traffic,
location based services, shopping, parking, streaming audio and
live news.
HARMAN also received a number of industry accolades for its
products and services. Respected advisory firm Zinnov recognized
the Company for the second time, naming HARMAN a top engineering
services provider. HARMAN was placed in the “Leadership Zone” for
the Information Services, New Media and Gaming categories. HfS
Research also honored HARMAN with a place in its “Winner’s Circle”,
recognizing the Company’s excellence in software product
engineering services.
Other (Corporate)
FY 2016 Key Figures – Other
Three Months Ended March 31
Nine Months Ended March 31
Increase (Decrease)
Increase(Decrease)
$ millions (except
per share data)
3M FY16
3M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
9M FY16
9M FY15
IncludingCurrencyChanges
ExcludingCurrencyChanges1
SG&A
36 49 (28%) (28%)
107 119 (10%)
(10%) Restructuring & non-recurring costs
1 -
1 -
Acquisition-related items - 9
(2)
12
Non-GAAP -
operational1
SG&A 35 40
(12%) (12%) 108
107 1% 1% 1 A non-GAAP measure,
see reconciliations of non-GAAP measures later in this release.
Other (Corporate) SG&A expenses include compensation,
benefit and occupancy costs for corporate employees, new technology
innovation and expenses associated with the Company’s brand
identity campaign. On a non-GAAP basis, Corporate SG&A as a
percentage of total Company net sales decreased 60 basis points to
2.2 percent.
HARMAN International Industries,
Incorporated
Consolidated Statements of
Income
(In
thousands, except earnings per share data; unaudited)
Three Months EndedMarch 31,
Nine Months Ended
March 31,
2016
2015
2016
2015
Net sales $1,628,082
$1,464,193 $5,031,127
$4,476,664 Cost of sales 1,135,215
1,046,063 3,505,770
3,150,736 Gross profit 492,867
418,130 1,525,357
1,325,928 Selling, general and administrative
expenses 357,514 326,623
1,099,384 969,881
Operating income 135,353
91,507 425,973 356,047
Other expenses:
Interest expense, net 8,633
3,001 24,558 7,861
Foreign exchange losses (gains), net 3,570
(3,406) 2,612
(4,366) Miscellaneous, net 2,912
2,294 11,262
6,932 Income before income taxes
120,238 89,618 387,541
345,620 Income tax expense, net
31,419 19,346
98,019 76,250 Equity in net loss of
unconsolidated subsidiaries -
23 - 23 Net income
88,819 70,249
289,522 269,347 Net (loss)
income attributable to non-controlling interest
(5) (46) 702
(156) Net income attributable to HARMAN
International Industries, Incorporated
88,824
70,295
288,820
269,503
Earnings per share:
Basic $1.23 $1.00
$4.01 $3.87 Diluted
$1.22 $0.99
$3.98 $3.83 Weighted average shares
outstanding:
Basic 72,020 69,946
72,046 69,557 Diluted
72,642 70,795
72,524 70,322
HARMAN International Industries,
Incorporated
Consolidated Balance Sheets
(In
thousands; unaudited) March 31,
June 30,
2016
2015
ASSETS
Current Assets
Cash and cash equivalents $360,420
$649,513 Receivables, net
1,087,327 1,024,139 Inventories
840,216 693,574 Other current assets
502,943 461,366 Total
current assets 2,790,906
2,828,592 Property, plant and equipment, net
576,788 552,421 Intangible assets, net
496,289 669,667 Goodwill
1,426,202 1,287,180 Deferred tax
assets, long-term, net 116,212
100,032 Other assets 382,000
428,008 Total assets
$5,788,397
$5,865,900
LIABILITIES AND EQUITY
Current liabilities
Current portion of long-term debt
$4,227 $4,550 Short-term
debt 812 1,021 Accounts
payable 781,962 918,910
Accrued liabilities 673,371
907,024 Accrued warranties 173,479
163,331 Income taxes payable
29,022 76,131 Total current liabilities
1,662,873 2,070,967
Borrowings under revolving credit facility
483,000 283,125 Long-term debt
803,809 797,542 Pension liability
189,259 186,662 Other
non-current liabilities 174,865
134,778 Total liabilities 3,313,806
3,473,074 Total HARMAN International
Industries, Incorporated shareholders' equity
2,474,573 2,374,613 Noncontrolling interest
18 18,213 Total equity
2,474,591 2,392,826 Total
liabilities and equity
$5,788,397
$5,865,900
HARMAN International Industries,
Incorporated
Consolidated Statement of
Income
Reconciliation of GAAP to Non-GAAP
Results
(In thousands except earnings
per share data; unaudited) Three Months Ended
March 31, 2016
GAAP
Adjustments
Non-GAAP -
Operational
Net sales $1,628,082 $0
$1,628,082 Cost of sales
1,135,215 (2,213)a
1,133,002 Gross profit 492,867
2,213 495,080 Selling, general and
administrative expenses 357,514
(10,666)b 346,848 Operating income
135,353 12,879
148,232 Other expenses:
Interest
expense, net 8,633 -
8,633 Foreign exchange losses (gains), net
3,570 (1)
3,569 Miscellaneous, net 2,912
(408) 2,504 Income before income
taxes 120,238 13,288
133,526 Income tax expense, net
31,419 3,482c
34,901 Net income 88,819
9,806 98,625 Net income attributable to
non-controlling interest (5)
- (5) Net income attributable to HARMAN
International Industries, Incorporated
$88,824
$9,806
$98,630
Earnings per share:
Basic
$1.23 $0.14 $1.37
Diluted $1.22 $0.13
$1.36 Weighted average shares outstanding:
Basic 72,020
72,020 Diluted
72,642
72,642
a) Restructuring expense in Cost of Sales
was $2.2 million for projects to increase manufacturing
productivity.
b) Restructuring expense in SG&A was
$3.4 million primarily due to projects to increase productivity in
engineering, manufacturing and administrative functions; other
non-recurring expense included in SG&A was $7.3 million.
Acquisition-related expenses were $1.2 million, including $7.9
million of intangible amortization expenses.
c) The tax benefits are calculated by
multiplying the actual restructuring / non-recurring charge in each
individual country by the discrete tax rate within that specific
country.
HARMAN has provided a reconciliation of
non-GAAP measures in order to provide the users of these
consolidated financial statements with a better understanding of
its non-recurring charges. These non-GAAP measures are not
measurements under accounting principles generally accepted in the
United States. These measurements should be considered in addition
to, but not as a substitute for, the information contained in
HARMAN’s consolidated financial statements prepared in accordance
with US GAAP.
HARMAN International Industries,
Incorporated
Consolidated Statement of
Income
Reconciliation of GAAP to Non-GAAP
Results
(In thousands except earnings
per share data; unaudited) Nine Months Ended
March 31, 2016
GAAP
Adjustments
Non-GAAP -
Operational
Net sales $5,031,127 $0
$5,031,127 Cost of sales
3,505,770 (5,214)a
3,500,556 Gross profit 1,525,357
5,214 1,530,571 Selling, general and
administrative expenses 1,099,384
(60,963)b 1,038,421 Operating
income 425,973 66,177
492,150 Other expenses:
Interest expense, net 24,558
- 24,558 Foreign exchange losses
(gains), net 2,612 (1)
2,611 Miscellaneous, net
11,262 (3,545) 7,717
Income before income taxes 387,541
69,723 457,264 Income tax
expense, net 98,019
18,668c 116,687 Equity in net loss of
unconsolidated subsidiaries -
- - Net income
289,522 51,055 340,577
Net income attributable to non-controlling interest
702 - 702 Net
income attributable to HARMAN International Industries,
Incorporated
$288,820
$51,055
$339,875
Earnings per share:
Basic
$4.01 $0.71 $4.72
Diluted $3.98 $0.70
$4.69 Weighted average shares outstanding:
Basic 72,046
72,046 Diluted
72,524
72,524
a) Restructuring expense in Cost of Sales
was $5.2 million for projects to increase manufacturing
productivity.
b) Restructuring expense in SG&A was
$6.5 million primarily due to projects to increase productivity in
engineering, manufacturing and administrative functions; other
non-recurring expense included in SG&A was $54.5 million.
Acquisition-related expenses were $34.4 million, including $41.2
million of intangible amortization expenses.
c) The tax benefits are calculated by
multiplying the actual restructuring / non-recurring charge in each
individual country by the discrete tax rate within that specific
country.
HARMAN has provided a reconciliation of
non-GAAP measures in order to provide the users of these
consolidated financial statements with a better understanding of
its non-recurring charges. These non-GAAP measures are not
measurements under accounting principles generally accepted in the
United States. These measurements should be considered in addition
to, but not as a substitute for, the information contained in
HARMAN’s consolidated financial statements prepared in accordance
with US GAAP.
HARMAN International Industries,
Incorporated
Consolidated Statement of
Income
Reconciliation of GAAP to Non-GAAP
Results
(In thousands except earnings
per share data; unaudited) Three Months Ended
March 31, 2015
GAAP
Adjustments
Non-GAAP -
Operational
Net sales $1,464,193 $0
$1,464,193 Cost of sales
1,046,063 (3,599)a
1,042,464 Gross profit 418,130
3,599 421,729 Selling, general and
administrative expenses 326,623
(18,999)b 307,624 Operating income
91,507 22,598
114,105 Other expenses:
Interest
expense, net 3,001 -
3,001 Foreign exchange losses (gains), net
(3,406) -
(3,406) Miscellaneous, net 2,294
- 2,294 Income before income
taxes 89,618 22,598
112,216 Income tax expense, net
19,346 6,170c
25,516 Equity in loss of unconsolidated subsidiary
23 - 23 Net income
70,249 16,428
86,677 Net income attributable to non-controlling
interest (46) -
(46) Net income attributable to HARMAN International
Industries, Incorporated
$70,295
$16,428
$86,723
Earnings per share:
Basic
$1.00 $0.23 $1.24
Diluted $0.99 $0.23
$1.22 Weighted average shares outstanding:
Basic 69,946
69,946 Diluted
70,795
70,795
a) Restructuring expense in Cost of Sales
was $3.6 million for projects to increase manufacturing
productivity.
b) Restructuring expense in SG&A was
$11.2 million primarily due to projects to increase productivity in
engineering, manufacturing and administrative functions; other
non-recurring expense included in SG&A was $7.8 million
including M&A deal related expenses.
c) The tax benefits are calculated by
multiplying the actual restructuring / non-recurring charge in each
individual
country by the discrete tax rate within
that specific country.
HARMAN has provided a reconciliation of
non-GAAP measures in order to provide the users of these
consolidated financial statements with a better understanding of
its non-recurring charges. These non-GAAP measures are not
measurements under accounting principles generally accepted in the
United States. These measurements should be considered in addition
to, but not as a substitute for, the information contained in
HARMAN’s consolidated financial statements prepared in accordance
with US GAAP.
HARMAN International Industries,
Incorporated
Consolidated Statement of
Income
Reconciliation of GAAP to Non-GAAP
Results
(In thousands except earnings
per share data; unaudited) Nine Months Ended
March 31, 2015
GAAP
Adjustments
Non-GAAP -
Operational
Net sales $4,476,664 $0
$4,476,664 Cost of sales
3,150,736 8,014 3,158,750
Gross profit 1,325,928
(8,014)a 1,317,914 Selling, general and
administrative expenses 969,881
(55,966)b 913,915 Operating income
356,047 47,952
403,999 Other expenses:
Interest
expense, net 7,861 -
7,861 Foreign exchange losses (gains), net
(4,366) -
(4,366) Miscellaneous, net 6,932
- 6,932 Income before income
taxes 345,620 47,952
393,572 Income tax expense, net
76,250 12,799c
89,049 Equity in net loss of unconsolidated subsidiaries
23 - 23 Net
income 269,347 35,153
304,500 Net income attributable to
non-controlling interest (156)
- (156) Net income attributable to
HARMAN International Industries, Incorporated
$269,503
$35,153
$304,656
Earnings per share:
Basic
$3.87 $0.51 $4.38
Diluted $3.83 $0.50
$4.33 Weighted average shares outstanding:
Basic 69,557
69,557 Diluted
70,322
70,322
a) Restructuring expense in Cost of Sales
was $7.9 million for projects to increase manufacturing
productivity, offset by a $15.9M accrual reversal for a US Customs
/ NAFTA related exposure.
b) Restructuring expense in SG&A was
$38.9 million primarily due to projects to increase productivity in
engineering and administrative functions. Other non-recurring
expense includes in SG&A was $17.1M including
acquisition-related expenses.
c) The tax benefits are calculated by
multiplying the actual restructuring / non-recurring charge in each
individual country by the statutory tax rate within that specific
country.
HARMAN has provided a reconciliation of
non-GAAP measures in order to provide the users of these
consolidated financial statements with a better understanding of
its non-recurring charges. These non-GAAP measures are not
measurements under accounting principles generally accepted in the
United States. These measurements should be considered in addition
to, but not as a substitute for, the information contained in
HARMAN’s consolidated financial statements prepared in accordance
with US GAAP.
HARMAN International Industries,
Incorporated
Selected Financial Data
Reconciliation of GAAP to Non-GAAP
Results
Foreign Currency Translation
Impact
(In
thousands; unaudited) Three Months Ended March
31,
Increase /(Decrease)
2016
2015
Net sales - nominal currency
$1,628,082 $1,464,193
11% Effects of foreign currency translation (1)
(15,917)
Net sales - local currency
$1,628,082 $1,448,276
12%
Gross profit - nominal
currency $492,867
$418,130 18% Effects of foreign currency
translation (1)
(3,254)
Gross profit - local currency
$492,867 $414,876
19%
SG&A - nominal currency
$357,514 $326,623
9% Effects of foreign currency translation (1)
(3,127)
SG&A - local currency
$357,514 $323,496
11%
Operating income - nominal currency
$135,353 $91,507
48% Effects of foreign currency translation (1)
(127)
Operating income - local currency
$135,353 $91,380
48%
Net income attributable
to HARMAN International Industries, Incorporated - nominal currency
$88,824 $70,295
26% Effects of foreign currency translation (1)
825
Net income attributable to HARMAN
International Industries, Incorporated - local currency
$88,824 $71,120
25%
(1) Impact of restating prior
year results at current year foreign exchange rates.
HARMAN has provided a reconciliation of
the non-GAAP measures in the table above to provide the users of
these consolidated financial statements with a better understanding
of the Company’s performance. Because changes in currency exchange
rates affect its reported financial results, the Company shows the
rates of change both including and excluding the effect of these
changes in exchange rates. The Company encourages readers of its
financial statements to evaluate its financial performance
excluding the impact of foreign currency translation. These
non-GAAP measures are not measurements under accounting principles
generally accepted in the United States. This measurement should be
considered in addition to, but not as a substitute for, the
information contained in HARMAN’s consolidated financial statements
prepared in accordance with US GAAP.
HARMAN International Industries,
Incorporated
Selected Financial Data
Reconciliation of Non-GAAP
Results
Foreign Currency Translation
Impact
EXCLUDING restructuring and non-recurring charges
(In thousands; unaudited)
Three Months Ended March 31,
Increase /(Decrease)
2016
2015
Net sales - nominal currency
$1,628,082 $1,464,193
11% Effects of foreign currency translation (1)
(15,917)
Net sales - local currency
$1,628,082 $1,448,276
12%
Gross profit - nominal
currency $495,080
$421,729 17% Effects of foreign currency
translation (1)
(3,219)
Gross profit - local currency
$495,080 $418,510
18%
SG&A - nominal currency
$346,848 $307,624
13% Effects of foreign currency translation (1)
(3,114)
SG&A - local currency
$346,848 $304,510
14%
Operating income - nominal currency
$148,232 $114,105
30% Effects of foreign currency translation (1)
(105)
Operating income - local currency
$148,232 $114,000
30%
Net income attributable
to HARMAN International Industries, Incorporated - nominal currency
$98,630 $86,723
14% Effects of foreign currency translation (1)
846
Net income attributable to HARMAN
International Industries, Incorporated - local currency
$98,630 $87,569
13%
(1) Impact of restating prior
year results at current year foreign exchange rates.
HARMAN has provided a reconciliation of
the non-GAAP measures in the table above to provide the users of
the consolidated financial statements with a better understanding
of the Company’s performance. Because changes in currency exchange
rates affect its reported financial results, the Company shows the
rates of change both including and excluding the effect of these
changes in exchange rates. The Company encourages readers of its
financial statements to evaluate its financial performance
excluding the impact of foreign currency translation. These
non-GAAP measures are not measurements under accounting principles
generally accepted in the United States. This measurement should be
considered in addition to, but not as a substitute for, the
information contained in HARMAN’s consolidated financial statements
prepared in accordance with US GAAP.
HARMAN International Industries,
Incorporated
Selected Financial Data
Reconciliation of GAAP to Non-GAAP
Results
Foreign Currency Translation
Impact
(In
thousands; unaudited) Nine Months Ended March
31,
Increase /(Decrease)
2016
2015
Net sales - nominal currency
$5,031,127 $4,476,664
12% Effects of foreign currency translation (1)
(214,786)
Net sales - local currency
$5,031,127 $4,261,878
18%
Gross profit - nominal
currency $1,525,357
$1,325,928 15% Effects of foreign currency
translation (1)
(51,602)
Gross profit - local currency
$1,525,357 $1,274,326
20%
SG&A - nominal
currency $1,099,384
$969,881 13% Effects of foreign currency
translation (1)
(40,629)
SG&A - local currency
$1,099,384 $929,252
18%
Operating income - nominal
currency $425,973
$356,047 20% Effects of foreign currency
translation (1)
(10,973)
Operating income - local currency
$425,973 $345,074
23%
Net income attributable
to HARMAN International Industries, Incorporated - nominal currency
$288,820 $269,503
7% Effects of foreign currency translation (1)
(6,853)
Net income attributable to HARMAN
International Industries, Incorporated - local currency
$288,820 $262,650
10%
(1) Impact of restating prior
year results at current year foreign exchange rates.
HARMAN has provided a reconciliation of
the non-GAAP measures in the table above to provide the users of
the consolidated financial statements with a better understanding
of the Company’s performance. Because changes in currency exchange
rates affect its reported financial results, the Company shows the
rates of change both including and excluding the effect of these
changes in exchange rates. The Company encourages readers of its
financial statements to evaluate its financial performance
excluding the impact of foreign currency translation. These
non-GAAP measures are not measurements under accounting principles
generally accepted in the United States. This measurement should be
considered in addition to, but not as a substitute for, the
information contained in HARMAN’s consolidated financial statements
prepared in accordance with US GAAP.
HARMAN International Industries,
Incorporated
Selected Financial Data
Reconciliation of GAAP to Non-GAAP
Results
Foreign Currency Translation
Impact
EXCLUDING restructuring and non-recurring charges
(In thousands; unaudited)
Nine Months Ended March 31,
Increase /(Decrease)
2016
2015
Net sales - nominal currency
$5,031,127 $4,476,664
12% Effects of foreign currency translation (1)
(214,786)
Net sales - local currency
$5,031,127 $4,261,878
18%
Gross profit - nominal
currency $1,530,571
$1,317,914 16% Effects of foreign currency
translation (1)
(52,150)
Gross profit - local currency
$1,530,571 $1,265,764
21%
SG&A - nominal
currency $1,038,421
$(913,915) 14% Effects of foreign currency
translation (1)
36,824
SG&A - local currency
$1,038,421 $(877,091)
18%
Operating income - nominal
currency $492,150
$403,999 22% Effects of foreign currency
translation (1)
(15,326)
Operating income - local currency
$492,150 $388,673
27%
Net income attributable
to HARMAN International Industries, Incorporated - nominal currency
$339,875 $304,656
12% Effects of foreign currency translation (1)
(11,206)
Net income attributable to HARMAN
International Industries, Incorporated - local currency
$339,875 $293,450
16%
(1) Impact of restating prior
year results at current year foreign exchange rates.
HARMAN has provided a reconciliation of
the non-GAAP measures in the table above to provide the users of
the consolidated financial statements with a better understanding
of the Company’s performance. Because changes in currency exchange
rates affect its reported financial results, the Company shows the
rates of change both including and excluding the effect of these
changes in exchange rates. The Company encourages readers of its
financial statements to evaluate its financial performance
excluding the impact of foreign currency translation. These
non-GAAP measures are not measurements under accounting principles
generally accepted in the United States. This measurement should be
considered in addition to, but not as a substitute for, the
information contained in HARMAN’s consolidated financial statements
prepared in accordance with US GAAP.
Harman International Industries,
Incorporated
Reconciliation of GAAP to Non-GAAP
Results
(In
thousands, except earnings per share data; unaudited)
Three Months Ended March 31, 2016 Three
Months Ended March 31, 2015
GAAP
Adjustments
Non-GAAP -
Operational
GAAP
Adjustments
Non-GAAP -
Operational
HARMAN
Operating income
$135,353 $12,879
$148,232 $91,507
$22,598 $114,105 Depreciation &
Amortization 51,005
(10,144) 40,861 40,262
(4,552) 35,710 EBITDA
186,358 2,735
189,093 131,769
18,046 149,815 CONNECTED CAR
Operating income
95,617 2,689
98,306 73,661 563
74,224 Depreciation & Amortization
19,760 (1,880)
17,880 17,043 (1,166)
15,877 EBITDA 115,377
809 116,186
90,704 (603)
90,101 LIFESTYLE AUDIO
Operating income 60,574
3,333 63,907 44,626
7,506 52,132 Depreciation
& Amortization 13,853
(5,287) 8,566 11,410
(2,324) 9,086 EBITDA
74,427 (1,954)
72,473 56,036
5,182 61,218 PROFESSIONAL SOLUTIONS
Operating income
2,667 4,415
7,082 16,043 5,659
21,702 Depreciation & Amortization
8,935 (631) 8,304
8,129 (99)
8,030 EBITDA 11,602
3,784 15,386
24,172 5,560 29,732
CONNECTED SERVICES
Operating
income 11,799 2,147
13,946 6,303
- 6,303 Depreciation &
Amortization 6,484
(2,348) 4,136 1,482
- 1,482 EBITDA
18,283 (201)
18,082 7,785 -
7,785
HARMAN has provided a reconciliation of
non-GAAP measures in order to provide the users of these
consolidated financial statements with a better understanding of
its non-recurring charges. These non-GAAP measures are not
measurements under accounting principles generally accepted in the
United States. These measurements should be considered in addition
to, but not as a substitute for, the information contained in
HARMAN’s consolidated financial statements prepared in accordance
with US GAAP.
Harman International Industries,
Incorporated
Reconciliation of GAAP to Non-GAAP
Results
(In
thousands, except earnings per share data; unaudited)
Nine Months Ended March 31, 2016 Nine
Months Ended March 31, 2015
GAAP
Adjustments
Non-GAAP -
Operational
GAAP
Adjustments
Non-GAAP -
Operational
HARMAN
Operating income
$425,973 $66,177
$492,150 $356,047
$47,952 $403,999 Depreciation &
Amortization 165,841
(47,289) 118,552 114,808
(7,337) 107,471 EBITDA
591,814 18,888
610,702 470,855
40,615 511,470 CONNECTED CAR
Operating income
267,102 7,468
274,570 223,007 5,247
228,254 Depreciation & Amortization
57,179 (5,523)
51,656 51,565
(3,828) 47,737 EBITDA
324,281 1,945 326,226
274,572 1,419
275,991 LIFESTYLE AUDIO
Operating income 191,283
18,379 209,662
148,475 23,299
171,774 Depreciation & Amortization 40,673
(15,416) 25,257
29,512 (2,379)
27,133 EBITDA 231,956
2,963 234,919
177,987 20,920 198,907
PROFESSIONAL SOLUTIONS
Operating income 52,304
11,231 63,535 75,128
7,910 83,038 Depreciation
& Amortization 26,294
(1,890) 24,404 24,650
(165) 24,485 EBITDA
78,598 9,341
87,939 99,778
7,745 107,523 CONNECTED SERVICES
Operating income
21,857 30,476
52,333 26,912 -
26,912 Depreciation & Amortization
35,239 (24,461)
10,778 2,484 -
2,484 EBITDA 57,096
6,015 63,111
29,396 - 29,396
HARMAN has provided a reconciliation of
non-GAAP measures in order to provide the users of these
consolidated financial statements with a better understanding of
its non-recurring charges. These non-GAAP measures are not
measurements under accounting principles generally accepted in the
United States. These measurements should be considered in addition
to, but not as a substitute for, the information contained in
HARMAN’s consolidated financial statements prepared in accordance
with US GAAP.
Harman International Industries,
Incorporated
Intercompany Revenue Reconciliation, 3
Months Ended March 31, 2016
Three Months Ended March 31,
2016
Connected Car
Lifestyle Audio
Professional Solutions
Connected Services
Eliminations
HARMAN (In thousands; unaudited)
Net Trade Sales $766,757 $472,234 $231,551 $157,540
$0 $1,628,082 Intercompany Sales - 547 465 8,475 (9,487) - Net
Sales 766,757 472,781
232,016 166,015
(9,487) 1,628,082
Harman International Industries,
Incorporated
Intercompany Revenue Reconciliation, 9
Months Ended March 31, 2016
Nine Months Ended March 31,
2016
Connected Car
Lifestyle Audio
Professional Solutions
Connected Services
Eliminations HARMAN (In thousands; unaudited)
Net Trade Sales $2,259,209
$1,558,408 $726,159 $487,312 $39 $5,031,127 Intercompany Sales -
1,802 1,834 22,129 (25,765) - Net Sales
2,259,209 1,560,210
727,993 509,441 (25,765)
5,031,127
HARMAN International Industries,
Incorporated
Total Liquidity Reconciliation
Total Company Liquidity
March 31, 2016
$ millions Cash & cash equivalents
$360 Short-term investments
0 Available credit under Revolving Credit Facility
713
Total Liquidity
$1,073
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428005568/en/
Harman InternationalDarrin Shewchuk, +1 203-328-3834Senior
Director, Corporate
Communicationsdarrin.shewchuk@harman.comorYijing Brentano, +1
203-328-3500Vice President, Investor
Relationsyijing.brentano@harman.com
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