Bauer Performance Sports Ltd. (TSX:BAU) ("Bauer" or the "Company") today
announced its interim financial results for the first quarter of fiscal 2014
ended August 31, 2013. All figures are in U.S. dollars.
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US$ 000,000's except
per share data and % Three months ended
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Change vs. prior
Aug 31, 2013 Aug 31, 2012 period
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Revenues $154.0 $148.3 4%
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Gross profit 59.7 60.3 -1%
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Adjusted Gross Profit(i) 61.5 61.0 1%
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Adjusted EBITDA(i) 36.9 37.9 -3%
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Net income (loss) 21.3 16.0 33%
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Adjusted Net Income(i) 23.1 22.9 1%
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Earnings (Loss) per share
(diluted) $0.57 $0.45 27%
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Adjusted EPS(i) $0.63 $0.65 -3%
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(i)Note: Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income/Loss and
Adjusted EPS are non-IFRS measures. For the relevant definitions and
reconciliations to reported results, please see "Non-IFRS Measures" at the end
of this news release and in the Company's Management's Discussion and Analysis
("MD&A") for the most recent period.
Bauer's overall revenues increased by 4% in the first quarter of fiscal 2014.
This increase was fueled primarily by strong performance in apparel, lacrosse,
and roller hockey as well as several ice hockey equipment categories. Apparel
revenues increased by 57% driven by strong growth in off-ice team apparel, base
layer performance apparel, lifestyle apparel, and the addition of hockey and
soccer uniform sales. Lacrosse sales increased 43% driven by strong demand for
the new CASCADE "R" helmet, growth in our MAVERIK equipment line, and an
additional month of Cascade sales compared to the first quarter of fiscal 2013.
Roller hockey sales grew 47% driven by strong skate sales. Ice hockey equipment
sales grew in key categories such as sticks, protective equipment, and
replacement steel blades; however, this was offset by the fact that the prior
year included the initial launch of BAUER's third family of ice hockey
equipment, NEXUS, resulting in a 2% decline in ice hockey equipment sales versus
the prior year. High levels of retail inventory in the hockey marketplace also
contributed to the lower ice hockey equipment revenues in the quarter.
Overall revenues from the North American market grew by 3% in the first quarter
of fiscal 2014, while sales outside North America grew by 7%.
In addition to Bauer's strong first quarter results, the Company also announced
that it has obtained $70.1 million of booking orders for its 2013 "Holiday"
season (October 2013 - March 2014), an increase of 9% on a currency neutral
basis (7% including the impact of foreign currency) over the 2012 "Holiday"
season, reflecting the continuing enthusiasm for BAUER's innovative products.
"Our diversified platform, and our dedication to delivering innovative, high
quality, performance enhancing products continues to drive growth," said Kevin
Davis, President and Chief Executive Officer of Bauer. "Customer demand for our
products remains very strong, and we continue to take share in this challenging
marketplace. We are extremely pleased with the increase in booking orders and
expect that 2014 will be another record year for our top and bottom line
performance as the headwinds which have been impacting our revenues are
beginning to dissipate."
Adjusted Gross Profit in the first quarter of fiscal 2014 increased slightly to
$61.5 million. Adjusted Gross Profit as a percentage of revenues decreased to
39.9%, compared to 41.1% in the comparative period of fiscal 2013, primarily due
to growth in uniforms which have lower gross profit margins compared to our
other equipment and apparel categories.
Excluding the impact of one-time acquisition related charges and share-based
compensation expense, SG&A as a percentage of revenues increased to 15.1% from
14.2% in the comparative quarter last year. This increase was driven primarily
by the effect of adding the SG&A from recently acquired companies in a
seasonally low revenue quarter for these same companies. Adjusted Net Income
grew to $23.1 million and Adjusted EPS was $0.63 per share. The increase in
average shares outstanding in the first quarter of fiscal 2014 relative to the
first quarter of fiscal 2013 due to the issuance of shares to finance the
Cascade acquisition reduced our Q1 Adjusted EPS by three cents per share.
On a trailing twelve-month basis, revenues were $405.2 million, Adjusted Gross
Profit reached $153.5 million or 37.9% of revenues, Adjusted EBITDA was $61.3
million, and Adjusted EPS was $0.98.
The Company continued to manage its balance sheet and generate strong cash flow
as its leverage ratio, defined as net indebtedness divided by EBITDA, reduced to
2.70 compared to 2.78 as of August 31, 2012. As of August 31, 2013 Bauer had
working capital of $267.7 million compared to working capital of $250.4 million
as of August 31, 2012. This year-over-year increase was due primarily to higher
inventories and receivables related to the acquisifations of Inaria
International, Inc. and Combat Sports.
SELECTED HIGHLIGHTS
-- Combat Sports became the exclusive provider of bats for the NCAA
Division I Washington State University ("WSU") baseball program for
three years, beginning with the upcoming 2014 season. WSU plays in the
competitive Pacific-12 Conference (PAC-12), and has made 16 appearances
in the NCAA regional tournament and reached the College World Series
four times. The team has produced 23 Major League Baseball draft picks
in the last five years.
-- BAUER and Hockey Canada announced the next phase of their Grow the Game
partnership, including initial research study results as well as the
creation of pilot programs developed to specifically address the results
of those findings.
CONFERENCE CALL AND WEBCAST
Management will hold a conference call and live audio webcast on Friday October
4, 2013 at 10:00 a.m. (ET) to discuss the Company's fourth quarter and fiscal
year-end results. The call will be hosted by Kevin Davis, President and Chief
Executive Officer and Amir Rosenthal, Chief Financial Officer. Following
management's presentation, there will be a question and answer session for
analysts and investors.
To access the call, please dial 1-888-539-3678 or 1-719-325-2491. The conference
call will also be accessible via webcast at www.bauerperformancesports.com.
A replay of the conference call will be available from 1:00 p.m. ET on October
4, 2013, until midnight ET, October 18, 2013. To access the replay, dial
1-877-870-5176 or 1-858-384-5517, followed by passcode 6619878.
ABOUT BAUER PERFORMANCE SPORTS LTD.
Bauer Performance Sports Ltd. (TSX:BAU) is a leading developer and manufacturer
of ice hockey, roller hockey, lacrosse, baseball and softball equipment as well
as related apparel. The company has the most recognized and strongest brand in
the ice hockey equipment industry, and holds the top market share position in
both ice and roller hockey. Its products are marketed under the BAUER, MISSION,
MAVERIK, CASCADE, INARIA and COMBAT brand names and are distributed by sales
representatives and independent distributors throughout the world. Bauer
Performance Sports is focused on building its leadership position and growing
market share in all product categories through continued innovation at every
level. For more information, visit www.bauerperformancesports.com.
NON-IFRS MEASURES
Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS
are non-IFRS measures. Adjusted Gross Profit is defined as gross profit plus the
following expenses which are part of cost of goods sold: (i) amortization and
depreciation of intangible assets, (ii) non-cash charges to cost of goods sold
resulting from fair market value adjustments to inventory as a result of
business acquisitions, (iii) reserves established to dispose of obsolete
inventory acquired from acquisitions and (iv) other one-time or non-cash items.
Adjusted EBITDA is defined as EBITDA (net income adjusted for income tax
expense, depreciation and amortization, losses related to amendments to the
Company's credit facility, gain or loss on disposal of fixed assets, net
interest expense, deferred financing fees, unrealized gains/losses on derivative
instruments, and realized and unrealized gains/losses related to foreign
exchange revaluation) before restructuring and other one-time or non-cash
charges associated with acquisitions, other one-time or non-cash items, pre-IPO
sponsor fees, costs related to share offerings, as well as share-based payment
expense. Adjusted Net Income is defined as net income adjusted for unrealized
gains/losses related to derivative instruments and unrealized gains/losses
related to foreign exchange revaluation, one-time or non-cash charges associated
with acquisitions, amortization of acquisition related intangible assets for
acquisitions since fiscal 2012, costs related to share offerings, share-based
compensation expense, and other non-cash or one-time items. Adjusted EPS is
defined as Adjusted Net Income/Loss divided by the weighted average diluted
shares outstanding.
Reconciliations of these non-IFRS measures to the relevant reported results can
be found in the Company's MD&A for the first quarter of fiscal 2014.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements within the meaning of
applicable securities laws, including with respect to booking orders translating
into realized sales, the Company achieving record top and bottom line
performance for the remainder of fiscal 2014, the ability of the Company to
continue increasing its market share and the dissipation of external factors
which have been negatively impacting the Company's revenues. Forward-looking
statements relate to analyses and other information that are based on forecasts
of future results and estimates of amounts not yet determinable. The words
"may", "will", "would", "should", "could", "expects", "plans", "intends",
"trends", "indications", "anticipates", "believes", "estimates", "predicts",
"likely" or "potential" or the negative or other variations of these words or
other comparable words or phrases, are intended to identify forward looking
statements.
Forward-looking statements, by their nature, are based on assumptions, including
those described herein and are subject to important risks and uncertainties.
Many factors could cause our actual results to differ materially from those
expressed or implied by the forward looking statements, including, without
limitation, the following factors: inability to introduce new and innovative
products, intense competition in the equipment and apparel industries, inability
to introduce technical innovation, inability to protect worldwide intellectual
property rights, inability to translate booking orders into realized sales,
inability to successfully integrate recent acquisitions, decrease in ice hockey,
roller hockey and/or lacrosse participation rates, adverse publicity, reduction
in popularity of the NHL and other professional leagues in which our products
are used, inability to maintain and enhance brands, reliance on third party
suppliers and manufacturers, disruption of distribution chain or loss of
significant customers or suppliers, cost of raw materials and shipping freight
and other cost pressures, a change in the mix or timing of orders placed by
customers, inability to forecast demand for products, inventory shrinkage or
excess inventory, product liability claims and product recalls, compliance with
standards of testing and athletic governing bodies, departure of senior
executives or other key personnel, litigation, employment or union related
matters, fluctuations in the value of certain foreign currencies in relation to
the U.S. dollar, inability to manage foreign exchange derivative instruments,
general economic and market conditions, changes in consumer preferences and the
difficulty in anticipating or forecasting those changes, natural disasters, as
well as the factors identified in the "Risk Factors" section of Bauer's Annual
Information Form dated August 27, 2013 available on SEDAR at www.sedar.com.
Furthermore, unless otherwise stated, the forward looking statements contained
in this press release are made as of the date of this press release, and we have
no intention and undertake no obligation to update or revise any forward looking
statements, whether as a result of new information, future events or otherwise,
except as required by law.
FOR FURTHER INFORMATION PLEASE CONTACT:
INVESTOR INQUIRIES
Bauer Performance Sports Ltd.
Amir Rosenthal
Chief Financial Officer
603-610-5802
investors@bauerperformancesports.com
Spinnaker Capital Markets Inc.
Kevin O'Connor / Ali Mahdavi
416-962-3300
ko@spinnakercmi.com
MEDIA INQUIRIES
Bauer Performance Sports Ltd.
Tory Mazzola
Global Communications Manager
603-430-2111
media@bauerperformancesports.com
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