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Cobra Electronics Corporation (NASDAQ:COBR)

Q2 2014 Earnings Conference Call

July 24, 2014 11:00 AM ET

Executives

Jim Bazet - CEO

Bob Ben - SVP and CFO

Sally Washlow - President

Analysts

James Fronda - Sidoti & Company

David Rode - Stifel

Operator

Good day, and welcome to Cobra Electronics Corporation Second Quarter Investor Conference Call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Jim Bazet, Chairman and CEO with Cobra. Please go ahead, sir.

Jim Bazet

Thank you, operator, and welcome to the Cobra Electronics second quarter results conference call. With me today, I've got the usual cast of characters Bob Ben, Senior Vice President and Chief Financial Officer; and Sally Washlow, our President. Each of them will have an opportunity to address our results shortly, and we’ll be able to respond to all of your questions at the conclusion of our call.

I'll now ask Bob to give some opening remarks regarding our call today.

Bob Ben

Before we begin, please keep in mind that our call today will include certain forward-looking statements, and that actual results could differ materially from the results projected in the forward-looking statements. We refer you to our Forms 10-K and 10-Q, especially the Risk Factors, for information that could cause actual results to differ materially from the results projected in the forward-looking statements. Please also keep in mind that this conference call is being simultaneously broadcast over the Internet and a replay will be available on the Cobra website for 30 days.

Now I would like to turn the call back to Jim Bazet to share his thoughts on our second quarter results.

Jim Bazet

Thank you Bob. This morning we reported net income of $87,000 or $0.01 per share for the second quarter of 2014. This compares to a net loss of $1.9 million or $0.29 per share for the second quarter of 2013. In addition there was an operating income of $308,000 for the current quarter, compared to an operating loss of $1.9 million in the same quarter of last year. We’ll discuss in a little bit about we're even going to back the back half better but I’d like to move on for right now.

I’d like to spend some time reviewing the second quarter net sales reserves and what were the key drivers. Consolidated net sales for the second quarter of 2014 were $28.7 million as compared to $25.6 million in the second quarter of 2013. This is primarily due to increases in both reporting segments. The Cobra segment net sales, again Cobra PPL and Cobra U.S., that segment’s net sales were $2.7 million or 12% higher than the previous year’s second quarter.

The higher sales for the quarter of that segment resulted in the higher sales of Dash Cams, Portable Power Packs and other new products that we have from the prior year’s quarters and an increase in sale of Citizens Band radio, Truck Navigation and 2-way radios. So both our legacy categories and our products seem to be doing well in this quarter.

Dash Cam sales included three new models and Portable Power Pack include five new models in particular the popular all new JumPack. Sally will talk more about our signing new product shortly and how they’re getting some traction for us. The increase in sales of Citizens Band radio and Truck Navigation products reflected higher sales of certain large customers. 2-way radio sales increased due to a major retail picking up two models, one of which was new to the market. These increases in sales were partially offset by significantly lower European sales included in the Cobra segment due to the difficult economic and political climate in Eastern Europe particularly Russia.

PPL segment net sales were $457,000 or 12.7% higher than in the prior year’s second quarter. This sales increase was attributable to the effect of foreign currency changes and higher sales of Truckmate Navigation products that sold under this new Snooper name.

Turning to the outlook for the third quarter of 2014 and for the entire year, as noted in our press release this morning, we expect growth in operating income in the third quarter of 2014 compared to the same quarter last year. In addition, in order to significantly improve profitability we have implemented reductions and cost of sales, fixed operating expenses and capital expenditures that totaled between $2 million and $2.5 million in the second half of 2014. A significant amount these reductions will result in a substantial reduction in headcount with all severance expenses will be recorded in the third quarter 2014.

We believe that these steps, a historically stronger second half performance and additional sales from exciting new products and growth initiatives will enable the Company to achieve profitability for 2014 a significant increase and operating profit in fiscal year 2014 compared to operating loss in fiscal 2013. In conclusion we believe that our Company will show a significant improvement in the second half of 2014 and is well positioned for the future quarters for the following reasons.

Again you’ve heard me say before our brand equity, we talk about that we are in 80 countries and 55,000 store fronts and we’ve been in business 52 years. This nearly gives us the footprint and the spring board for what’s happening. What’s really going to be contributing to these things is the interest that we’re getting in our new products. Several of them have had exciting sales that we’re very pleased with and our expense cuts will make up a large part of our savings in back half in our operating profit.

And this point let me turn the call over to Bob. Sally will then update you on sales efforts, how some of these products are doing and then we’ll open the call for questions. Bob?

Bob Ben

Thanks Jim, good morning everyone. As Jim noted earlier Cobra reported net income for the second quarter of $87,000 or $0.01 per share as compared to a net loss in the same quarter last year of $1.9 million or $0.29 per share. This very significant net earnings improvement from the second quarter of 2013 was generated by increased sales, higher gross margin and a decrease in SG&A expense. The Company reported net sales of $28.7 million in the current quarter which was an overall 12.1% increase from the second quarter of 2013.

Consolidated gross margin was 28.3%, compared to 26.1% in the second quarter of 2013, primarily as a result of a favorable sales mix. The gross margin for the Cobra segment was 27.3%, compared to 24.9% in the second quarter 2013, which reflected more sales of higher margin products, particularly new products. PPL’s gross margin increased to 34.5% from 33.1% in the prior year second quarter mainly due to an improved sales mix and an exchange gain compared to an exchange loss in the same quarter of last year.

Now turning to Selling, General & Administrative expenses, these decreased to a total of $7.8 million from $8.5 million in the prior year second quarter. Variable selling expenses increased consistent with the net sales increase. However fixed expenses decreased as a result of significantly lowered litigation expenses which in the second quarter of last year included the settlement expense from the Fleming patent litigation.

As a result of all these factors, Cobra reported an operating income of $308,000 for the current quarter compared to an operating loss of $1.9 million in the second quarter of 2013. Interest expense for the second quarter 2014 was $406,000, compared to a $150,000 in the same quarter of 2013 which primarily reflected the write off of deferred financing fees that resulted from a change in the participant bank, and the bank fees incurred for the required first quarter 2014 covenant waiver.

Other income was a $195,000 compared to other income of $86,000 in the prior year’s quarter, primarily due to a higher gain in the cash surrender value of life insurance that the Company owns for the purpose of funding deferred compensation programs for certain current and former officers of the company. Finally a cash provision of $10,000 was reported in the current quarter, which compared to 14,000 in the second quarter of 2013.

Looking at the first six months of 2014 and comparing to the same period of 2013, net sales were $50.1 million, compared to $47.2 million for the first six months of 2013. Gross margin for the first six months was 27.7%, an increase from last year’s gross margin during the same period of 27.4%. SG&A expense decreased to $15.2 million on a year to date basis, from $16.5 million in the first six months of 2013, mainly due to significant expenses for the Fleming patent litigation in the prior year’s period.

As a result, the Company reported a significantly reduced operating loss for the year to date of $1.3 million compared to an operating loss of $3.6 million in the prior year’s period. However as Jim stated the Company anticipates a significant operating income for fiscal year 2014, when compared to the operating loss in fiscal year 2013.

Turning to review the June 30 balance sheet, accounts receivable at the end of the quarter were $15.7 million, compared to $12.3 million one year earlier, which mainly reflected higher sales. In addition day sales outstanding decreased to 44 days, compared to 47 days in the prior year’s quarter. Inventories at the end of the second quarter increased to $35.7 million from $34.6 million at June 30, 2013 due to purchases of new products.

As a result Cobra had interest bearing debt of $18.7 million compared to $16.2 million at June 30, 2013 and cash of $3.9 million compared to cash of $2.0 million at June 30, 2013 mainly due to the timing of foreign cash receipts. Now I’d like to turn the call over to Sally to provide an update on our markets and products. Sally?

Sally Washlow

Thanks Bob, good morning. I’m pleased to discuss our new product results and overview of our activities as it relates to the second quarter and our position for the balance of the year. As mentioned, Cobra segment net sales were $2.7 million or 12% higher than in Q2 2013. Much of this increase was due to the release of several new products. I will discuss in greater detail the sales of these new products starting with our well received Drive HD Dash Cam line. In Q2 we launched three new models of the Drive HD Dash Cam by Cobra; the CDR 820 priced at $99, the CDR 840 priced at $149 and the CDR 900 priced at $249. All three Drive HD Dash Cams continuously record video of the road ahead of you, servicing as the perfect eye witness in the event of traffic incidents while also providing peace of mind and an extra sense of security for drivers.

With Drive HD Dash Cams, you will never miss a moment. Each model also feature a motion sensor for automatic reporting while driving as well as a G sensor which senses sudden acceleration and collisions to automatically capture and protect critical footage surrounding an incident.

The series Wi-Fi enabled flagship model, CDR 900 goes the next step in video capture and sharing through the free Cobra Drive HD app. Wi-Fi’s functionality allows a user to connect and stream live and recorded footage, directly to the user's iOS or Android device to instantly view and share footage.

Through the Drive HD app, users can remotely command their CDR 900 to start recording as well as control its setting through the app’s easy-to-use menu. Through cloud mode, users can view their camera in real time from their smartphone anywhere in the world. In addition to these innovative features, the CDR 900 captures amazing 1296p, Super HD or 1080p HD video to ensure high quality imaging even during night time.

The Dash Cams can be found at major U.S. consumer electronics retailers travel centers, and online. We look to further expand U.S. distribution in the third and fourth quarter along with shipping the product in Europe, the Middle East and China.

Portable power was a stronger driver of our improved year-over-year results. The Cobra portable solar power series consist of the CPP 100 SP and the CPP 300 SP. Both models feature convenient solar charging as well as USB charging capability, giving the users the freedom to quickly and conveniently charge smartphones, tablet and other mobile devices virtually anywhere.

As today's consumers to become more reliant on mobile devices to conduct day-to-day activities, having consistent and reliable power source is critical. The CPP 300 features duel high efficiency solar panels that users can easily maintain, a reliable power source for their mobile devices even in the absence of the charging outlet. Its clever, lightweight and rugged designing opens up to expose these two high efficiency solar panels, thus doubling the solar area for rapid 2.1amp charge for up to three devices at once, so everyone can stay powered up. The Cobra's CPP 300 also features charging versatility via USB power ports and in illuminated LCD display for clear viewing of power level and charge status.

The CPP 100 has a suggested retail price of $59.95 and the CPP 300 is at a suggested price of $79. Another strong contributor was a Cobra JumPack, a unique ultra-compact and portable power pack and jump starter in pocket size dimensions. Slightly larger than a deck of cards and weighing only 10 ounces, the Cobra JumPack allows users to rapidly charge smartphones, tablets, cameras or other mobile devices and additionally has enough power to even jump start a car, motorcycle, boat, or other vehicles.

The JumPack features a powerful 200amp starting current with 400 peak current. 2.1amp USB output and a powerful 7500 Milliamp lithium cobalt battery with an LED battery status indicator. The unit also comes with a building LED flash light and a strobe function for SOS emergency and includes jumper cables. The CPP 500 as suggested retail price of 129 and is available at major retailers and will be expanding in Europe, Asia and the Middle East throughout the balance of the calendar year.

Coming off a strong showing at the Mid-America Truck Show in late March, Q2 showed strength in our Citizen Band and Truck Navigation business for the professional driver. The 8500 PRO HD Truck Navigation unit sets a milestone in Cobra’s offering to its community of professional drivers. As the most advanced model to date, the 8500 PRO offers Tier 1 maps that include lifetime updates, live and predictive traffic, real time diesel fuel prices, live weather, superior truck last-mile routing, and enhanced state mileage logs in our in our service centers.

Citizen Band radio continues to be a useful communication tool and key promotions help drive increase sales. As mentioned, improved placement of 2-way radios with major retailers and the launch of our new flagship model, the CXT 1035 improved Q2 results. The CXT 1035 is a compact, versatile two-way radio for year-round use. The rugged and floating design offers a unique solution to end users that require maximum performance and retails at a suggested price of $99. Cobra’s new line of Bluetooth speakers, designed for rugged use are the Cobra Airwave Mini and the Cobra Airwave Box. The Cobra Airwave Mini features a weather proof resistant exterior and the Cobra Airwave Box utilizes a rugged, floating waterproof design for complete immersion in water. Both models feature up to 10 hours of playback time and up to a 120 hours of standby time.

The Cobra Airwave Mini hits a key suggested price point of $39 and the Airwave Box is at $79 and both launched in the second quarter. We expect further growth from the Airwave series as we launch in Europe and Asia in Q3. Online sales continue to build momentum and our Omni-channel marketing program is building strong momentum as we ramp up for the busy holiday quarters ahead. We continue to sign up several partners to be part of the Cobra Select and Cobra Direct program.

Furthermore this platform allows us the ability to pre-launch key products, not only on Cobra.com but with many of our channel partners as well. As discussed, along with our key product initiatives, we are continuing with our international expansion as part of our growth initiatives and look forward to sharing our results on not only the market but product expansion in Europe, the Middle East and Asia. Several of our new products will launch in these regions during the third quarter. This concludes my overview of our recent efforts and we remain excited and optimistic regarding our future and we look forward to sharing with you our results.

Operator, we are now ready to take questions.

Question-And-Answer Session

Operator

(Operator Instructions) And our first question comes from James Fronda of Sidoti & Company.

James Fronda - Sidoti & Company

Just on the favorable sales mix, do you think this is a one-time thing, or this gross margin in the 28% range is going to be consistent over time?

Sally Washlow

This is Sally. I don’t think it’s a onetime thing, we launched a lot of products domestically in Q2 and we’ll follow up with the international platforms of all the products throughout the balance of the year. So we got some good momentum going in Q2 with those products and [indiscernible] follow throughout the rest of the year.

James Fronda - Sidoti & Company

Okay. And why was it such a strong impact this quarter? Do you think that was just the strength of the products themselves?

Sally Washlow

It’s strength of the product as well as with the placement at some major retailers. We hit the timing right on the major retailers reset. So the combination of all of that works in our favor.

Operator

Our next question comes from Timothy Stabile [ph].

Unidentified Analyst

Help me out with the sales increase and following up on the last gentleman’s question, are there initial load-ins that are not going to be repeated? So I mean the quarter was extraordinarily or unusually strong because of the initial load-ins.

Sally Washlow

There are certain load-ins that wouldn’t be repeated but, if I look ahead to next year Q2, there’ll be new products in line and retailers ready for some of the, the spring reset. So it’s a little far ahead to look at that but for the balance of the year and Q3 and Q4, there’re some domestic load-ins that will happen as well as we’re launching these products globally throughout Q3 and Q4.

Jim Bazet

This is Jim. The other thing we have to think about too is that we do have scheduled promotions in the back half, Black Friday promotions and things such as that, that will acquire other types of load-ins. So I think you’ll see that added to the fact that you’ll have more sell through and the retailers order by sell through. And so far these products are selling through very well. I think those two things give us confidence in the back half between the promotion load-ins and the sell through.

Unidentified Analyst

Well here’s my point and my question. Historically the Company showing a modest income for Q2 is a pretty decent result I think. So my question is regarding the cost cutting, don’t you need that SG&A structure to fund all these products and the increased sales in all of this and where did you find these efficiencies? Is this like essentially a discovery or drilling down the realization that we can one, permanently lower our cost structure without compromising new products and/or two, Cobra’s at a permanently lower plateau with regard to gross margins, although it’s improved in this quarter -- I'm sorry, this question is really long -- and we have to reduce our cost structure because we're at a permanently lower plateau? I know it’s a long question. Which is it? What's going on?

Jim Bazet

Short answer is no, but the longer answer, a more fair answer to your question is as follows. This is not just counting that we have six employees over here and maybe we can get by with five and we have four. We’ve actually done, not in a conventional sense of the word, but a lot of the restructuring, we’re combing operations in Europe, but we are redoing how we handle certain administrative functions and we’re even revisiting our combination between our engineering and product development. Our goal here is not just to chop off.

You heard me talking about in a lot of previous conservations about scale. We are confident about our growth, but we also want to have scale. We don’t want that growth to come at the expense of continually adding on SG&A because that’s not good.

So we actually restructured the Company and in doing so we did it to increase operating efficiencies. In other words, is there a better way to do something that we’ve done in the past, do we do it differently so that we don’t need the overhead structuring? It’s not just people. You have to understand that there is a variety of other things that we’re cutting out that we’ve mentioned. And we want to have the ability to manage our growth without exponential increases in SG&A and we had to reorganize to do that. So what the result is going to be is we’re going to have a growth -- we’re going to be able to manage growth more effectively with a much more effective overhead structure.

Net in these expenses, Tim, to further illustrate to further illustrate this point, net in these expenses are some things that we’re adding, that a certain type of skill sets that we feel that we don’t have to get into the sales channels and to develop certain products. So this is a net number that we’re coming up with and it’s not just cut.

Unidentified Analyst

And why did you also disclose $2 million to $2.5 million as the range of reduction which includes capital expenditures? And I'm kind of confused why you put that in that mix, maybe Bob or Jim?

Jim Bazet

Yes, it’s really simple. The way we look at things, the way we have in the past when we made expense reductions, we look at cash expense, okay. So we would have to write a check, while from a revenue side, -- excuse me, from an expense side, it would maybe just amortization of those expenses. From cash outside, we would have to write a check for that and if it’s not necessary right now and where we’re going, we can put it off and do something different without sacrificing any of our growth, that’s precisely what we did. The other reason is as it affects our loan covenants and we’re trying to get our self in a position where we’re not having any problems with these loan covenants any more.

Unidentified Analyst

Let me ask about that I thought we got a new bank. Do we have the new bank, the new facility?

Jim Bazet

It’s the same bank we’ve been using. We are in the process of negotiating some changes in our covenants and we’re working with the bank for a way where we no reason to believe that not going wave. They've given us indications on this so.

Unidentified Analyst

Will there be another waiver fee then again?

Jim Bazet

Yes.

Unidentified Analyst

And what was that fee in the prior quarter or for the prior waiver?

Jim Bazet

We’re still negotiating. That fee should – I believe Bob, you can answer this.

Bob Ben

In the prior quarter, it was $105,000, but we’re in the process negotiating this quarter and I believe it’s going to be a little bit less than that.

Unidentified Analyst

This is not cheap to -- why are we getting triggered every quarter, because it's an EBITDA covenant that’s measured quarterly, trailing? Is that why?

Bob Ben

Well, I think first of all let me explain. We have asset based loan and typically with an asset based loan, you don’t have a catch flow covenant and in that we -- prior to this year, we did have a fixed charge covenant ratio and we had to change it because we were meeting that covenant for a variety of reasons. We are in the process of discussing with the bank what a more appropriate covenant would be going forward, given our performance and our projected performance and I can’t go into the details there, but certainly we’re -- as Jim said we’re looking to improve that and I believe we can. But this there were negotiations about that, but I am confident that as Jim said that we receive a waiver for Q2 performance. And it maybe an amendment by the way though obviously if we change the covenant, and the waiver fees go right to interest expense, whereas the amendment is considered in the accounting world a modification and can be capitalized.

Unidentified Analyst

Let me ask one final question, then I'll get back in queue please, just about the same subject. The $2 million to $2.5 million, how much of that range is exclusively cost reductions then and how much of that is cost reduction? I presume you can give a precise number on that or a fairly precise number as opposed to a range, no?

Jim Bazet

We have approximately $400,000 in CapEx reduction and the balance of that is in cost reduction in two places; one, normal expenses and the other is in product cost, which would come down into the gross margin, obviously.

Unidentified Analyst

Can these viewed as permanent annualized operating expense reductions? Is it logical for shareholders to think of a similar rough savings in 2015 and going forward or is that is it like one time or what [indiscernible].

Jim Bazet

Yes it’s permanent with one exception. What would offset that Tim, is growth in -- and this should be of no trouble but growth in variable selling expenses that accompanies growth in sales. These are all fixed expenses but they could be offset in -- I don’t want to mislead you -- because they could be offset somewhat in 2015 by growth in sales.

Unidentified Analyst

Aren’t we really levering this Company’s ability to make money in terms of cost reductions here with an improved product cycle as represented in the quarter we are announcing today? Doesn’t this really reduce costs and increased gross margins speaks to a pretty darn solid second half of the year, no, speaking broadly?

Bob Ben

Yes, that’s correct. I mean that’s what we've got forecasted in our outlook. Yes, that’s correct, yes, that’s what we are saying.

Operator

(Operator Instructions) Our next question comes from David Rode of Stifel.

David Rode - Stifel

Well, congratulations, I guess, are in order for returning to profitability as well as improved margin. I believe the only firm covering you, Sidoti, projected a 15 loss for the quarter. So $0.01 we'll take it. It's nice to see. So great. First question Bob, book value right now is, what, $5.81 now, or what?

Bob Ben

Actually, Dave, I show 5.83 per share as of June 30.

David Rode - Stifel

Okay. And the deferred tax item, what's the dollar figure on that right now?

Bob Ben

The evaluation allowance as of June 30th, remains at $10.3 million.

David Rode - Stifel

So that's about $1.50, $1.55 a share?

Bob Ben

I show a $1.56 per share if the full allowance is reversed at some point.

David Rode - Stifel

And you mentioned the banks. You guys are addressing that in the short term, it sounds like. So, okay, great. I have a question I guess this might be towards Jim. I know a year ago China passed the U.S. in auto purchases/sales. Currently, where -- on subsequent calls you've have talked about distribution set-up over there. Where are you currently positioned with distributors over there today? And what goals do you have for additional distribution and hopefully starting to make some significant sales over there at some point?

Jim Bazet

Thanks Dave. In the best tradition of the CEO. I'm going to pass the buck on this one. In all seriousness, Sally has got some real time on that because she's just been working with over the last two or three days as well. So I’m going to ask Sally to answer that one.

Sally Washlow

Hi, Dave. So, we have started our launch of product in China and we're working with one main distributor right now but -- I should have brought my map of the regions. We are targeting to have on board by the end of the year as many as six throughout regions that we have targeted where there is the most highways and infrastructure and vehicle. So, although we haven’t signed all of them up yet, we are in that process as we rollout some new products specifically for the China market. So, we've got a good plan for there and we're really looking forward to not only launching the product in there but establishing a pretty strong market share and presence.

David Rode - Stifel

Great. Now, Europe you had given us a sense that it's a little struggle over there. What are you doing over there moving forward in the short term?

Sally Washlow

So, in Eastern Europe, it’s certainly been a struggle and Jim had mentioned that we're restructuring over in Europe, consolidating as offices as well and we have an initiative to not only launch some of our new products over there in the third quarter but as well we're working with some of the major retailers directly over there for an improved presence of the Cobra and Snooper brands.

Jim Bazet

Just to quantify Dave, we haven’t been much in retail. We've been more of a distribution organization over there and our strategy had to be -- we have to start getting in some of these retails to really get the growth opportunities we think we deserve with the market share we're gaining. So just within the past two months we have had six meetings with major retailers over there and they have some excitement about the same products that Sally mentioned earlier, the Dash Cams, the JumPacks and our Two Way Radios. So this could be a different business model for us over there, we're structuring up for to Tim’s earlier question and some of the actions that we're taking restructuring up for our new business model over there that's going to be more efficient and more effective in the go-to-market style.

David Rode - Stifel

Great, and backing up on Tim’s question with cost savings and what not, I didn’t hear but we’re not looking at touching research and development, is that correct?

Jim Bazet

Absolutely not. We have done some restructuring in R&D, we don’t have any -- we didn’t get rid of any of our people necessarily, a couple of engineering for some product categories that we felt like just weren’t the best thing in our future. But we’re restructuring how we do that -- how we manage that and so forth for the better. All of these are attempts, not just to cut costs. We need to cut cost in this Company and management has been continually looking at that over the years. But we also have to make our Company a little more efficient and a little more effective with some times different type of people, sometimes less people, sometimes a different way to get something done. So we’ve initiated this from the process forward rather than a number of people backward and I think it’s really going to pay off for us, not just in expense savings but also in our ability to get things done quicker and in better form.

David Rode - Stifel

Okay. In subsequent calls you've also mentioned your e-commerce effort and any -- just kind of update us now for the depth of who you’re involved with or how many of the big players are involved with their e-commerce?

Sally Washlow

Certainly, I can update take that. So our e-commerce efforts are going along strong. I think we’re going to be in a good position for the third and fourth quarters, when sales really pick up in all channels in particular. Obviously we’ve had a direct relationship with companies like Amazon for a long time, but as the rest of our customers as well look at an Omni-channel approach to sales and marketing, we've linked with walmart.com, bestbuy.com are all partners of ours now in a direct, not only store capacity but .com capacity as well. We’re bringing a few others online as well. We’re doing it in a staged approach because we obviously don’t want pick more than we can handle, certainly with the trend of online sales but not only just to capture those sales. But we look at it as a philosophy that we want to be therefore wherever the customer wants to buy.

So they want to buy it online, that’s fine. If they want to buy it online and have it shipped to a store, we can help manage that or the traditional brick-and-mortar business, we'll be there for them as well. So just as the whole channel has been evolving, we’re getting ourselves well positioned to be able to take advantage of that.

David Rode - Stifel

And are you with costco.com and target.com yet as well or not?

Sally Washlow

We are with both. It's just some back-end things that had to happen, like more technical/EDI talking to each other.

David Rode - Stifel

And also in the area, these efforts being in the e-commerce platform, kind of high end of the Big Data, where are you at with Big Data, how many data points do you estimate you’ve got so far, either through the Android downloads or the iPhone downloads or even some of e-commerce business. Where are you at with data points and what are you doing in a bigger sense from marketing efforts to utilize the most data point.

Sally Washlow

So we certainly have about 1 million of the downloads for our radar and that’s on a global platform now but more importantly than that, we have a Drive HD app now for 7with CDR 900 but even looking beyond that, as Jim mentioned, some of our restructuring, we look at how do we gain more efficiencies and also we’ve invested in some stronger marketing tools. So we’re working with backend data providers to help us reach customers closer, whether we have a Cobra Nation program. But what we’re doing is every time we have touch point with a customer, whether it's through our customer service, whether it’s through the Facebook, whether it’s an online question, we’re capturing that data so that we can utilize it to see what it is end user interested in and then -- so we've taken about a year to pull all of this together in the I guess for lack of a better word, one file and we really are looking forward to be able to use the benefit of it, not only through the balance of this year but going forward as well. We have invested systems on to help syndicate online reviews, so that if we have a review in one spot the syndication goes through all of the partners with these reviews. We know that reviews drive online sales. So we’re very active and engaged in that world now.

Operator

(Operator Instructions). We have no further questions at this time.

Jim Bazet

Thank you, operator. I want to thank everyone first of all for coming to this call and just a few more points to take away from it if you would. Sally gave you a preview of some of the new products and some of the legs we’re getting on these new products and we’re very happy about that. Early indications are that this going to be great and some of these, if you'll recall our Q1 conference call, we talked about the some 40 new products that we introduced at the Consumer Electronics Show and this is just a few of them. Others are going to be introduced as we go through the quarter.

I want to -- Tim, brought up a good point and I want to just stress again about our expense cuts. These expense cuts were what fell out of a reorganization of the Company for us to be more efficient and more effective at going to market, more efficient and effective at developing our products and concept of mass production, and more efficient and effective in every way we do. We do this. We did this last year if you will recall in the back half. We will continue to do this. This management team continues to look at expenses constantly. We continue to look at our overhead cost and we continue to look at our working capital.

So we are trying to put scale into the Company, so that as we grow, we don’t’ have an exponential amount of expenses that are flowing us up on that, but we’ll never get rid of our develop-or-die philosophy in this. And it comes back to what’s made this company over the 50 years that it has been in business.

Let’s talk a little bit about -- it would not go without saying that we should talk a little bit about what we see as opportunities beyond what we’re talking about here today and some of the risk that we might see in the back half. I won't go into the some on the risks that you can read on the 6 o’clock news because those are evident to everyone.

But there are in the retail side of the business some major customers that have different financial conditions for different reasons that could be troubling to us. Feel comfortable in knowing that we judiciously use credit insurance and have in the past. It allows us to do two things. One, it allows us to continue selling to that customer as long as they’re capable of buying. And number two, it allows us to mitigate risks to the Company that could take away all the work we’re doing on profit. But that is and remains a risk in the industry.

The geopolitical climate in Europe, particularly Russia right now, you see it on the news all the time. The Russian consumer is reacting in a manner in which the rubble is down. They’re staying home. They’re not spending much money. There is a large retailer in Russia. I told the story before that has 400 retail stores. They have register rings and no stores of almost 300 a day and some 400 stores in the electronics department. There have been some days where they've had none. So it’s indicative of fact that the Russian consumer is staying home. Does that mean we don’t have a business in Russia? Does that mean the business is going fall further from where it is? Or does that mean it's something that we should really look at? Not at all.

We still have a reasonably good business in Russia. It’s just not as robust as we thought it was and that could an indicator of risk. Moving to the opportunities we certainly have some growth opportunities in Europe. You’ve heard me mentioned earlier that we’re looking at getting into the retail sides of the business all there. We can do that partly through the warehousing that we have right now and partly through maybe some additional contract warehousing, but that is something that we have to get. Just it’s different, nothing else to increase our profitability and growth over there and expand our market share so that we are even more competitive than we are today. That had some great opportunity. Some of that has been folded into the information that I gave you today. Some of that has not. It could go beyond that.

The legs that we’re getting on early indications on our new products, we believe are going to be sustainable through the back half and could even go better. We’re starting to see some glimmer in some of these products as catching some national media news and so forth and this is what we had hoped for. And then we’re continuing to grow our market shares in our legacy products and stay stable there.

So the outlook is good. We certainly appreciate your continued support of the company through good times and bad times. And I think what we’ve seen here today and what we represented in our Q2 investor conference call is a shift in us starting to move in right direction and have a descent year for 2014 as compared to 2013 and be able to take that as springboard and move beyond the 2015 and so forth, because these products are not just one-type wonders.

Well, thanks again for attending. We have a strong balance sheet. We have got a valued stock price. We have got descent cash flow. We're working on with our bank on reviewing some of those things and we’re keeping the expenses down, so hopefully we’ll all enjoy what’s happening here. So, thanks again. Operator, this ends our Q2 investor conference call.

Operator

And that does conclude today’s conference. We thank you for your participation.

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