The CEO of Snap One has sold down his shareholding in the Control 4 business, the sell down comes as analysts question the future for the business in the current market as their international business that includes Australia reports a 19.8% fall in revenues in the last quarter.
Last week the US business reported another fall in revenues and more losses in the quarter with stock in the channel a serious issue for the business.
The sale of shares in the business by CEO John Heyman resulted in a fall in the value of the Companies stock which has fallen 13% during the past six months.
Heyman sold 2,467 shares at an average price of US$10.08, he now only owns 1,756,708 shares of the company’s stock, valued at approximately US$17,707,616.64.
Snap One 2nd Quarter Fiscal ’23 Net Sales Decline 7.6% Due to what the business is describing as ‘Inventory Destocking’ by specialist dealers and custom installers.
Net sales were US $274.4 million down from $296.9 million in the comparable year-ago period.
International revenue which Australia and New Zealand are included in fell 19.8%. During the past six months international revenue fell from US$178.3M to
$171M.
Snap One reported a negligible net loss of -$0.1 million, a substantial improvement of +$1.2 million over the net loss of -$1.3 million it booked in the same quarter last year.
CEO Heyman claimed that during the last quarter, the business focused on driving higher adoption by their partners by introducing new products and related go-to-market initiatives.
He claims that the business was “Most likely growing their share of the market”.
Stock in the Channel that is not selling through has become a problem for Snap One who operate a local subsidiary in Australia.
In a conference call with financial analysts, Heyman and CFO Michael Carlet said they have surveyed their “channel partners” and had calculated how much excess inventory there was in the channel overall…and how much had been destocked in the quarter.
While integrator sales are down 3.3%, 37.2%, international sales have become a problem for the US Company who re4cently took legal action against two of their former brands.
See separate story here.
Interest on loans appear to be a problem for the business. In the second quarter of fiscal 2022, interest expense was $7.7 million. But that has ballooned to $14.9 million this year.
Strata Gee claims that is an expense increase of $7.2 million or 92.8%.
The company says that the reason for this increase is that there were “higher average outstanding balances on our long-term debt and our Revolving Credit Facility as well as a higher interest rate on our long-term debt”.
Historical dat shows that the business is now in decline compared to past growth.
The company currently has A$893M in debt to service.
Snap One Holdings has a current ratio of 2.12, suggesting that it is liquid enough and is able to pay its financial obligations when due.
Sales of Snap One proprietary products (Snap One house brands) versus Third-Pary products delivered some interesting numbers.
While proprietary products sales dropped 11.7% 3rd party product sales increased 2.1% however, they delivered smaller profits.
In the 2nd quarter of fiscal 2023, propriety products sales came in at US$183.8 million, down 11.7% to $24.4 million compared to sales of US$208.2 million in the category in the same quarter last year.
Sales of third-party products came in at US$90.6 million, up $1.9 million or 2.1% over the sales of $88.7 million in the 2nd quarter of fiscal 2022.
That means the mix of sales is now down to 67.0% proprietary this year versus 70.1% last year, and up to 33.0% in third-party this year versus 29.9% last year.
Heyman told analysts that while their net sales are down, “We’re winning share.”
This would suggest that other comparable companies’ sales are down.
