Steinway Reports Q4 Results

Steinway Musical Instruments, Inc. (NYSE: LVB) has reported earnings for the quarter and year ended December 31, 2012.

Fourth Quarter Results Compared to Prior Year Period

• Sales of $100.7 million, up 6.5%
• Gross profit of $34.7 million, up 14.6%
• Gross margin increased to 34.5% from 32.0%
• Income from operations of $12.0 million, up 45.3%
• Adjusted EBITDA of $14.2 million, up 61.2%
• Diluted earnings of $0.51 per share, up from $0.26 per share
• Adjusted diluted earnings of $0.53 per share, up from $0.24 per share

2012 Results

• Sales of $353.7 million, up 2.2%
• Gross profit of $114.6 million, up 9.0%
• Gross margin increased to 32.4% from 30.4%
• Income from operations of $28.6 million, up 79.5%
• Adjusted EBITDA of $35.2 million, up 26.0%
• Diluted earnings of $1.08 per share, up from $0.13 per share
• Adjusted diluted earnings of $1.13 per share, up from $0.48 per share

Non-GAAP Adjustments are detailed in the attached financial tables.

Balance Sheet Highlights

• Cash of $73.4 million; net cash of $5.4 million
• Borrowing availability of over $100 million
• Inventory reduced $7.3 million, or 5.5%, from December 31, 2011

CEO Michael Sweeney said, “We finished the year with very positive results in the fourth quarter. Revenue and gross margins increased in both our band instrument and piano businesses. While we incurred some unusual operating expenses in the fourth quarter of both 2011 and 2012, our normal SG&A expenses were in line with sales. All in, our operating income rose a very strong 45%. We are quite pleased with our overall performance.”

Segment Information 
Piano Segment
Fourth Quarter Results Compared to Prior Year Period

• Sales of $71.4 million, up 7.0%
• Steinway grand piano units up 7.0%
• Boston and Essex piano unit decrease of 2.4%
• Gross margin increased to 39.4% from 37.2%

2012 Results

• Sales of $216.8 million, up $1.3 million
• Steinway grand piano units down 0.6%
• Boston and Essex piano unit decrease of 5.4%
• Gross margin increased to 36.9% from 35.6%

Band Segment
Fourth Quarter Results Compared to Prior Year Period

• Sales of $29.4 million, up 5.1%
• Brass and woodwind units up 2.0%
• Gross margin increased to 22.6% from 19.7%

2012 Results

• Sales of $136.9 million, up 4.7%
• Brass and woodwind units down 1.5%
• Gross margin increased to 25.3% from 21.8%