Audio equipment maker Harman International Industries, Inc. (HAR) reported a swing to second-quarter profit on Monday, benefiting from lower impairment charges, cost cuts, and higher revenues in all the three major business segments. Following the better-than-expected results, Harman shares gained more than 7% in after-hours trading.
The Stamford, Connecticut-based company reported a second-quarter net income of $16.10 million or $0.23 per share, compared to a loss of $319.13 million or $5.45 per share a year ago.
On a non-GAAP basis, Harman reported a net income of $28.33 million or $0.40 per share for the second quarter, compared to a net loss of $12.52 million or $0.21 per share in the similar quarter of 2008.
On average, five analysts polled by Thomson Reuters estimated earnings of $0.07 per share for the quarter. Analysts' estimates typically exclude special items.
Non-GAAP net income for the current quarter excludes restructuring charges in cost of sales of $2.8 million from closure of Portable Navigation Device business, restructuring charges in selling, general, and administrative expenses of $1.1 million, and a goodwill impairment charge of $9.3 million.
Prior-year non-GAAP net income excluded restructuring charges in cost of sales of $2.2 million, restructuring charges in selling, general, and administrative expenses of $23.1 million; and a goodwill impairment charge of $325.4 million.
Revenues for the second quarter increased 24% to $937.49 million from $755.88 million in the second quarter of 2008. Analysts expected revenues of $811.19 million for the quarter.
Excluding foreign currency translation, net sales increased 15%. Sequentially, sales increased 24% compared to the first quarter of fiscal 2010. Net sales increased in all three divisions primarily due to improved global economic conditions combined with market share gain.
In the preceding first quarter, Harman reported a net loss of $9 million or $0.14 per share, compared to a net income of $21 million or $0.36 per share in the year-ago period. Net sales for the first quarter declined to $757 million from $869 million in the year-ago period.
Sales of Automotive Division rose 29% to $668 million during the second quarter, and 18% when adjusted for constant currency. Sequentially, the increase was 23%. Higher sales in the segment was due to a 5.5 percentage point increase in gross profit margin due to improved leverage of fixed manufacturing expenses following higher sales volume and STEP Change program benefits.
Sales at Consumer Division was up 10% to $127 million during the second quarter, which was a 1% rise in constant currency terms from the prior-year quarter. When compared to the first quarter, sales jumped 52%. Higher sales for the segment was on a 4.9 percentage point rise in gross margin, resulting from cost saving initiatives.
In the professional division, sales climbed 18% to $133 million. On a constant currency basis, the increase in sales was 15% while on a sequential basis, sales increased 9% from the previous quarter. Gross margin for the segment improved 0.3 percentage points during the second quarter. Other sales, which includes QNX and Corporate businesses, declined 5% to 9 million in the second quarter.
The company's total gross margin for the second quarter increased 4.2 percentage points to 27.9% when compared to the same period last year, mainly on higher factory utilization associated with increased sales and improved productivity as a result of the STEP Change program. Gross profit for the quarter climbed to $258.90 million from $176.86 million a year ago.
Harman reported an operating income of $39.42 million, compared to an operating loss of $366.54 million in the year-earlier quarter. This was primarily due to a goodwill impairment charge in the second quarter last year. The company recorded a goodwill impairment charge of $9.28 million this year, compared to $325.45 million in the prior-year quarter. The company also had a loss on deconsolidation of $13.12 million during the second quarter of fiscal 2010.
Excluding non-recurring items, second-quarter operating profit was $53 million, compared to an operating loss of $16 million for the same period last year.
The company had an income tax expense of $10.18 million, compared to $50.19 million a year ago.
For the six-month period, the company reported a net income of $6.63 million or $0.09 per share, compared to a net loss of $298.14 million or $5.09 per share in the similar period last year. Revenue for the period increased to $1.69 billion from $1.63 billion in the year-earlier period.
Looking forward, Dinesh Paliwal, Chairman, President and CEO of Harman said, "We are on track to realize the full benefits of our $400 million STEP Change program, bringing permanent improvements to every corner of our operations. We will continue to maintain a careful balance across our tight cost management, cutting edge innovation and strategic marketing initiatives. While acknowledging the challenges posed by a fragile global marketplace, we will aggressively position our leading brands in both traditional and emerging markets".
Harman achieved $285 million in permanent savings by December 31, 2009 through its STEP Change program, compared to a target of $245 million. The company noted that it is ahead of schedule on its $400 million STEP Change permanent cost-savings program.
At the end of the second quarter, the company's cash and short-term investments totaled $630 million, compared to $535 million in the prior year quarter.
HAR closed Monday's regular trading at $35.50, up $0.57 or 1.63%, on a volume of 1.27 million shares on the New York Stock Exchange. In after hours trading, the stock is gaining $2.49 or 7.01%, and is at $37.99.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.