Harman International Industries Inc.
) reported earnings of $1.09 per share in the second quarter of
fiscal 2014, which comprehensively beat the Zacks Consensus
Estimate by 11 cents. Earnings per share jumped 84.7% from the
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Revenues increased 25.8% from the year-ago quarter to $1.33
billion and were ahead of the Zacks Consensus Estimate of $1.25
billion. The year-over-year increase was primarily due to strong
performance across its business segments.
Infotainment revenues jumped 28.0% from the year-ago quarter to
$691.0 million, primarily due to volume increases in the
company's recently launched platforms. During the quarter, Harman
won customer awards worth $725.0 million from the likes of VW
Group, Chang'an, Geely, Yamaha, Suzuki, BMW, Jaguar/Land Rover.
Lifestyle revenues soared 15.6% on a year-over-year basis to
$430.0 million primarily due to robust sales in Harman's home and
multimedia product lines and car audio business.
The company launched car audio systems in several vehicles,
including a Lexicon system in the Hyundai Genesis and a JBL
system in the
Professional division revenues jumped 43.8% from the year-ago
quarter to $197.0 million, primarily driven by strong performance
by Martin Professional and strong demand for audio products.
In the second quarter, gross margin expanded 290 basis points
(bps) on a year-over-year basis due to favorable product mix,
higher sales volume on fixed production costs and lower costs due
to productivity initiatives. Infotainment and Lifestyle gross
margin increased 320 bps and 380 bps, respectively. Professional
gross margin declined 130 bps from the year-ago quarter.
Selling, general and administrative (SG&A) expense as a
percentage of revenues increased 10 bps on a year-over-year
basis. The lower-than-expected increase in SG&A expense
positively impacted operating margin, which increased 270 bps in
Net income margin was 5.7% compared with 3.9% in the year-ago
As of Dec 31, 2013, cash and cash equivalents were $518.6 million
compared with $515.0 million as of Sep 30, 2013.
We believe that Harman's new manufacturing capacities, growing
product pipeline, solid patent portfolio, new awards as well as
product launches will boost top line and profitability over the
Moreover, Harman continues to expand due to its partnerships with
the likes of
). We believe that the new restructuring program will
significantly improve profitability in the near term. This will
provide Harman a competitive edge over the likes of
), going forward.
Currently, Harman carries a Zacks Rank #2 (Buy).