Forward Industries Gross profit margin remains steady at 21%

08 Sep '08

3 min read

Forward Industries Inc, a designer and distributor of custom carrying case solutions, announced financial results for its third fiscal quarter ended June 30, 2008 and for the nine months ended June 30, 2008.

Fiscal Third Quarter 2008 Financial Highlights – Compared to fiscal third quarter 2007:
• Net sales of $5.6 million increased $1.2 million, or 27%, due to higher sales of diabetic products of which grew by $2.1 million, or 86%.
• Gross profit margin remained steady at 21%.
• Operating expenses of $1.3 million decreased $220,000, or 14%, primarily due to lower personnel costs.
• Interest and other income of $97,000 decreased $150,000, or 61%, primarily due to lower interest rates.
• Net loss of $111,000, or ($0.01) per share, decreased from net loss of $283,000 or ($0.04) per share.
Fiscal Nine Month 2008 Financial Highlights – Compared to the nine months ended June 30, 2007:
• Net sales of $15.2 million decreased $2.5 million, or 14%, due to lower sales of cell phone products, which declined $6.1 million, or 84%.
• Gross profit decreased $1.3 million, or 31%, to $2.9 million primarily due to a steep decline in revenue from cell phone products.
• Operating expenses declined $0.5 million, or 10%, to $4.4 million due to reductions in personnel costs, travel and entertainment expenses, and royalty and commission.
• Interest and other income of $541,000 decreased $205,000, or 28%, primarily due to lower interest rates.
• Net loss was $0.8 million, or ($0.10) per share, compared to net income of $55,000 or $0.01 per share.

Douglas W. Sabra, Forward's Chief Executive Officer, commented, “We are very pleased with the sales growth we achieved with respect to our diabetic products. However, our gross margins on these products continue to be impacted by pricing pressure from our largest customers and the rising costs of production in China.

Addressing the margin issue, we will focus on increasing sales of other OEM products to help reduce our reliance on this product line and are moving aggressively to diversify our OEM customer base and product portfolio.

In this regard, we have recently hired sales personnel to strengthen our efforts in growing our other lines of business. Key among new personnel is Mr. Karsten Myralf who has been brought in as our Vice President of Global OEM Sales.

Mr. Myralf previously headed our European and cell phone product sales teams for many years and was instrumental to our success in 2005 when we generated record sales and profits. We believe that such investments in our OEM sales force are an essential component of our long term growth strategy.”

Mr. Sabra continued, “On the aftermarket side, we are very excited about our new license with Motorola, which provides us the opportunity for the first time to sell Motorola branded products in the United States, and Canada and to continue marketing licensed products in Europe.

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