CHDO CHDT Corporation Reports First Quarter 2012 Financial Results
- First quarter sales of $0.3 million reflects strategic shift and timing of promotional event orders
- Gross margin expanded 740 basis points to 31.9% in the first quarter on product mix
- Generated $455 thousand in cash from operations during the first quarter despite higher inventory to support recently launched domestic distribution business model
DEERFIELD BEACH, FL, May 15, 2012 - CHDT Corporation (OTCQB: CHDO) ("Company" or "CHDT"), a leader in the design and manufacturing of specialty power failure lighting solutions and innovator of consumer safety and security products, reported first quarter unaudited 2012 financial results.
Stewart Wallach, CHDT's President and CEO, commented, " During the quarter, we expanded our approach on how quickly we deliver product to our customers by implementing a domestic distribution program which includes warehousing inventory for expected customer requirements that we can deliver in an "on demand" manner for shelf stocking in their stores. This change increased the number of retail outlets that will carry our products by approximately 4,800 stores. We believe this approach will result in additional revenue growth over the course of 2012, and as a result, we expect our revenue stream will be more consistent over time."
First quarter 2012 top-line impacted by seasonal nature of business; Product mix drove margin improvement
Revenue decreased to $339 thousand in the first quarter of 2012, from $2.4 million in the prior-year period. This change reflects the variability of timing of orders and shipments due to the Company's direct import business model and CHDT's recent expansion of its channels to market via a domestic distribution program.
Gross profit for the first quarter decreased $483 thousand, or 81.2%, to $108 thousand from the first quarter of 2011. However, gross profit as a percentage of net sales, increased to 31.9% for the quarter compared with 24.5% for the same period the prior year due to product mix.
First quarter total operating expenses increased slightly to $424 thousand from $408 thousand in the prior-fiscal year period. The Company's interest expense reduced year-over-year by $44 thousand to $32 thousand, as it required less financing for overseas product.
As a result of the impact of the prior business model, net loss for the first quarter of 2012 was $348 thousand compared with net income of $107 thousand in the first quarter 2011 .
The Company generated $455 thousand in cash from operations in the first quarter of 2012, a measurable improvement of the prior year period where $462 thousand was used in operating activities. Inventory increased to $661 thousand at the end of the first quarter from $59 thousand at the end of fiscal 2011, in support of the Company's recently launched domestic sales business model.
Increased market presence in 2012; Continued expansion of sales and margin expected
The domestic distribution strategy is expected to drive sales growth as it enables the Company to serve a larger group of national retailers. Under the domestic distribution model, the Company expects smaller, more frequent orders to meet the shelving demand of retail customers based on the rate of sales requiring higher levels of inventory to meet the expected increase in regular demand, resulting in higher sales and expanding margins.
Mr. Wallach noted, "We believe there is exceptional momentum building at CHDT as we increased the availability of our power failure and safety and security solutions through our retail partners. We can now offer products to a broader range of customers and retailers, by direct import, domestic distribution or a combination thereof. As a result, there will be periods in 2012 when the comparatives will be unusual during the transition and as we build scale, but we believe this will help to normalize the business by minimizing over time the spikes in activity associated with the majority of the Company's historic business being promotional or seasonal."
Webcast and Teleconference to Review Results and Outlook
CHDT will host a live webcast and conference call on Wednesday, May 16, 2012 at 10:00 a.m. Eastern Time. During the call, management will review the financial and operating results and discuss the Company's corporate strategy and outlook, followed by a question-and-answer session. The conference call can be accessed by dialing (201) 689-8562. The listen-only audio webcast can be monitored at www.chdtcorp.com .
A telephonic replay will be available from 1:00 p.m. Eastern Time the day of the teleconference until Wednesday, May 23, 2012. T o listen to the replay of the call, dial (858) 384-5517 and enter replay pin number 392978 . Alternatively, the archive of the webcast will be available on the Company's website at www.chdtcorp.com . A transcript will also be posted to the Company's website, once available
