Source Interlink posted a net income of $6.1 million, or 11 cents per diluted share, on sales of $425.9 million, in its fiscal third quarter ended Oct. 31. Last year, in the corresponding period, the company posted $4.4 million in net income, or 18 cents per diluted share, on sales of $90.8 million, but that was before the company merged with Alliance Entertainment Corp. or acquired Chas Levy Circulating Co.
“In one year, we have more than quadrupled the size of our company while maintaining high levels of profitability and adding major new customers during a period of rapid growth and consolidation,” Souce Interlink chairman and CEO Leslie Flegel said in a statement.
During the quarter, the company announced that it expanded its reach into Walgreens, selling magazine and books to about 1,300 of its stores CDs and DVDs to 2,500 of the chain’s stores. Also, Source Interlink was named as the magazine and comic book distributor to all U.S. Virgin Megastores. And it became the magazine supplier for all of Costco’s 340 domestic stores.
During its conference call with Wall Street, Flegel said the company was looking at several potential acquisitions, which would provide additional elements that the company could effectively incorporate into its offerings. “We might investigate possiblities that expand our distribution networks in magazines, book, CDs, or DVDs,” he said. The potential acquisitions “range frankly from $40 million to, in one case, over $1 billion in sales.”
While the likelihood that the company will do some deal next year are strong, he wasn’t so sure about whether Source Interlink would pursue the company with $1 billion in sales.
Meanwhile the company noted that its earnings were hurt during the quarter by Hurricane Wilma. In addition to Alliance Entertainment distribution center being closed for almost a day during the storm, 57 stores that the company services were closed temporarily and some of them are still closed. In its earnings report, the company estimated that it lost about three cents a share because of Hurricane Wilma, but it expects to recoup 1 cent of that through insurance.
For the nine-month period ended Oct. 31, the company posted $10.4 million in net income, or 24 cents per diluted share on $1.05 billion in revenue. The company announced its earnings on Dec. 12, after the close of trading. Its closed at $11, down 43 cents on Dec. 13. Its 52-week range is $9.20-$13.48.
