Sport Supply Group, Inc. (NASDAQ: RBI) today reported a 105%
increase in its fully diluted earnings per share for the fiscal
year ending June 30, 2008. Metrics for the Quarter and the Year
Ending period are noted below: For the Fourth Fiscal Quarter Ending
June 30, 2008 Net Sales Up 8.9% to $61.1 Million Gross Margin
Percentage Up 180 basis points from 34.4% to 36.2% SG&A
Expenses Down 2% from $18.4 Million to $18.1 Million Operating
Profit Up 352% from $895,000 to $4.0 Million Fully Diluted EPS Up
from ($0.03) to $0.15 For the Fiscal Year Ending June 30, 2008 Net
Sales Up 6.1% to $251.4 Million Gross Margin Percentage Up 100
basis points from 35.2% to 36.2% SG&A Expenses Up less than 1%
from $70.8 Million to $71.37 Million Operating Profit Up 55% from
$12.69 Million to $19.7 Million Fully Diluted EPS Up from $0.37 to
$0.76 EBITDA Up 44% from $16.3 Million to $23.6 Million; Net Income
Up 152% from $3.9 Million to $9.7 Million Cash on-hand Up 262% from
$5.6 Million to $20.5 Million Free Cash Flow from Operations of
$1.75 Per Share; Cash Flow from Operations of $1.89 Per Share Adam
Blumenfeld, Chairman and CEO, stated: �We are pleased to report
outstanding results for the Quarter and Year ended June 30, 2008.
As noted above, every operating metric showed significant
improvement for the Quarter and the Year. These achievements are a
tribute to the nearly 800 hard-working employees we have across the
United States. We are particularly proud of the Company�s ability
to grow annual sales organically by 6.1% � to more than a quarter
of a billion dollars � during a year where we cut 25% of our paper
catalog circulation and eliminated approximately 1,000 SKUs from
the catalogs. This speaks to the improved marketing, merchandising,
list management and relationship development strategies that were
implemented during the year. In addition, we held expenses nearly
flat year over year, which was a key factor in driving operating
profit growth in Fiscal 2008. We intend to continue attacking the
cost structure of our business as aggressively as we target sales
growth opportunities, producing significant operating leverage and
maximizing the efficiency of our platform.� Regarding go-forward
strategies and Fiscal 2009, Mr. Blumenfeld commented: �The Company
has guided FY09 GAAP diluted EPS within the range of $0.85 - $0.95
per fully diluted share. While we acknowledge that no company is
immune to the risks associated with the current macroeconomic
environment, we believe Sport Supply Group will be able to take
advantage of potential industry weakness and gain share from
smaller competitors. In times of economic uncertainty customers
tend to gravitate to trusted, value-oriented suppliers, which is
precisely the proposition SSG offers its nearly 100,000 active
customers and base of nearly 400,000 potential customers. We have
launched several new programs � including enhanced prospecting
efforts and the opportunistic recruiting of seasoned industry
salespeople � designed to accelerate organic growth and take
advantage of under-serviced markets and accounts. �Additionally, we
continue to review a full pipeline of acquisition candidates and
are carefully evaluating opportunities to expand our geographic
footprint and/or stable of proprietary equipment brands. The
company�s operating platform and capital structure are better
positioned than ever to digest acquisition targets. We will
maintain a strict set of criteria for targets and focus attention
on those who can be both accretive to earnings and a powerful
strategic fit as we continue to expand our presence and reach in
this multi billion dollar space.� The Company will host a
conference call to discuss these results at 7:45AM CT / 8:45AM ET
today, Wednesday August 27, 2008. The call can be accessed by
dialing 866 383 8008 and using passcode 19765404. A replay of the
call will be available until 9/5/2008 by dialing 888 286 8010 and
using passcode 84585490. Sport Supply Group, Inc. is the nation's
leading marketer, manufacturer and distributor of sporting goods
and branded team uniforms to the institutional and team sports
market. The Company markets via 3 million direct catalogs, a 40
person telesales team, 160 direct sales professionals, more than 50
select Platinum Team Dealer Partners and a family of
company-controlled websites. This press release contains
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include statements relating to Sport Supply Group's
anticipated financial performance, business prospects, acquisition
opportunities, new developments and similar matters, and/or
statements preceded by, followed by or that include the words
"believes," "could," "expects," "anticipates," "estimates,"
"intends," "plans," or similar expressions. These forward-looking
statements are based on management's current expectations and
assumptions, which are inherently subject to uncertainties, risks
and changes in circumstances that are difficult to predict. Actual
results may differ materially from those suggested by the
forward-looking statements due to a variety of factors, including
changes in business, political, and economic conditions, actions
and initiatives by current and potential competitors, and certain
other additional factors described in Sport Supply Group's filings
with the Securities and Exchange Commission. Other unknown or
unpredictable factors also could have material adverse effects on
Sport Supply Group's future results, performance or achievements.
In light of these risks, uncertainties, assumptions and factors,
the forward-looking events or outcomes discussed in this press
release may not occur. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date stated, or if no date is stated, as of the date of this
press release. Sport Supply Group is not under any obligation and
does not intend to make publicly available any update or other
revisions to any of the forward-looking statements contained in
this press release to reflect circumstances existing after the date
of this press release or to reflect the occurrence of future events
even if experience or future events make it clear that any expected
results expressed or implied by those forward-looking statements
will not be realized. � � SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and
per share amounts) � Three Months Ended � Twelve Months Ended June
30, � June 30, 2008 � 2007 � 2008 � 2007 Net Sales $ 61,110 � $
56,073 $ 251,394 � $ 236,855 Cost of Sales � 39,014 � � � 36,782 �
� � 160,315 � � � 153,295 � Gross Profit 22,096 19,291 91,079
83,560 Selling, general and administrative expenses � 18,051 � � �
18,396 � � � 71,379 � � � 70,870 � Operating profit � 4,045 � � �
895 � � � 19,700 � � � 12,690 � Other Income (Expense): Interest
Income 88 49 290 191 Interest Expense (951 ) (1,578 ) (4,105 )
(6,002 ) Other Income � 47 � � � 37 � � � 124 � � � 146 � Total
other expense � (816 ) � � (1,492 ) � � (3,691 ) � � (5,665 )
Income before minority interest in income of consolidated
subsidiary and income taxes � 3,229 � (597 � ) � 16,009 � 7,025
Income tax provision 1,420 (295 ) 6,276 2,634 Minority interest in
income of consolidated subsidiary, net of tax � -- � � � -- � � �
-- � � � 531 � Net income $ 1,809 � � $ (302 ) � $ 9,733 � � $
3,860 � Weighted average number of shares outstanding: Basic �
12,361,816 � � � 10,248,078 � � � 12,122,765 � � � 10,235,308 �
Diluted � 12,478,174 � � � 10,248,078 � � � 15,656,672 � � �
10,373,907 � Net income per share� basic � $ � 0.15 � � � $ � (0.03
� ) � � $ � 0.80 � � � $ � 0.38 � Net income per share� diluted $
0.15 � � $ (0.03 ) � $ 0.76 � � $ 0.37 � Dividends declared per
share common stock $ 0.025 � � $ 0.025 � � $ 0.10 � � $ 0.10 � �
SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS � June 30, 2008 � 2007 (In thousands, except share and per
share amounts) ASSETS CURRENT ASSETS: Cash and cash equivalents $
20,531 $ 5,670 Accounts receivable, net of allowance for doubtful
accounts of $1,320 and $1,296, respectively 34,060 31,154
Inventories, net 36,318 32,241 Current portion of deferred income
taxes 3,866 3,790 Prepaid income taxes -- 3,208 Prepaid expenses
and other current assets � 1,203 � � 1,380 � Total current assets
95,978 77,443 PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $7,576 and $4,986, respectively 9,715 10,678
DEFERRED DEBT ISSUANCE COSTS, net of accumulated amortization of
$2,978 and $2,035, respectively � 1,389 2,309 INTANGIBLE ASSETS,
net of accumulated amortization of $4,431 and $3,379, respectively
� 6,972 8,024 GOODWILL 53,543 54,949 DEFERRED INCOME TAXES -- 3,045
OTHER ASSETS, net � 98 � � 144 � Total assets $ 167,695 � $ 156,592
� � LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES:
Accounts payable $ 21,183 $ 16,167 Accrued liabilities 11,842
10,318 Dividends payable 309 259 Accrued interest 240 291 Current
portion of long-term debt 108 3,608 Income taxes payable 677 --
Deferred tax liability � -- � � 129 � Total current liabilities
34,359 30,772 DEFERRED INCOME TAX LIABILITY 4,014 3,898 NOTES
PAYABLE AND OTHER LONG-TERM DEBT � 50,036 � � 71,386 � Total
liabilities 88,409 106,056 COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS� EQUITY: Preferred stock, $0.01 par value, 1,000,000
shares authorized; no shares issued -- -- Common stock, $0.01 par
value, 50,000,000 shares authorized; ����12,465,986 and 10,440,586
shares issued and ����12,362,060 and 10,354,560 shares outstanding,
respectively 125 104 Additional paid-in capital 64,648 44,276
Retained earnings 15,316 6,813 Treasury stock at cost, 103,926 and
86,026 shares, respectively � (803 ) � (657 ) Total stockholders'
equity � 79,286 � � 50,536 � � Total liabilities and stockholders'
equity $ 167,695 � $ 156,592 � � SPORT SUPPLY GROUP, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS � For the years
ended June 30, 2008 � 2007 � 2006 (In thousands) CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $ 9,733 $ 3,860 $ 1,896
Adjustments to reconcile net income to cash provided by (used in)
operating activities: Provision for uncollectible accounts
receivable 1,028 1,099 982 Depreciation and amortization expense
3,738 3,479 3,436 Amortization of deferred debt issuance costs 943
959 683 Loss on disposition of property and equipment -- -- 60
Deferred tax expense 4,362 2,542 1,060 Stock-based compensation
expense 494 -- 60 Minority interest in consolidated subsidiary --
531 608 Changes in operating assets and liabilities (net of effects
of acquisitions): Accounts receivable (3,934 ) (1,249 ) (2,793 )
Inventories (4,077 ) 4,944 (2,083 ) Prepaid Income taxes and income
taxes payable 3,885 (1,601 ) (962 ) Prepaid expenses and other
current assets 177 819 (1,248 ) Other assets, net 46 (313 ) (145 )
Accounts payable 5,016 1,365 (1,338 ) Accrued liabilities and
accrued interest � 1,473 � � 2,452 � � (388 ) � Net cash provided
by (used in) operating activities � 22,884 � � 18,887 � � (172 ) �
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and
equipment (1,723 ) (2,980 ) (1,694 ) Cash used in business
acquisitions, net of cash acquired of $0, $0 and $864, respectively
� -- � � (24,907 ) � (44,395 ) Net cash used in investing
activities � (1,723 ) � (27,887 ) � (46,089 ) � CASH FLOWS FROM
FINANCING ACTIVITIES: Deferred debt issuance cost (23 ) -- --
Proceeds from bank line of credit 1,015 34,935 174,895 Payments on
notes payable and line of credit (25,865 ) (24,435 ) (164,046 )
Cash paid for treasury shares (145 ) -- -- Payment of dividends
(1,180 ) (1,024 ) (1,020 ) Tax benefit related to the exercise of
stock options 378 507 -- Proceeds from issuance of common stock �
19,520 � � 608 � � 185 � Net cash provided by (used in) financing
activities � (6,300 ) � 10,591 � � 10,014 � � Net change in cash
and cash equivalents 14,861 1,591 (36,247 ) Cash and cash
equivalents, beginning of year � 5,670 � � 4,079 � � 40,326 � Cash
and cash equivalents, end of year $ 20,531 � $ 5,670 � $ 4,079 �
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for
interest $ 3,181 � $ 5,041 � $ 3,795 � Cash paid (refunded) for
income taxes $ (1,752 ) $ 1,378 � $ 1,612 � � � � SPORT SUPPLY
GROUP, INC. AND SUBSIDIARIES RECONCILIATION OF INCOME FROM
CONTINUING OPERATIONS TO EBITDA AND ADJUSTED EBITDA (Unaudited, in
thousands) � Three Months Ended June 30, Fiscal Year Ended June 30,
2008 � 2007 2008 � 2007 � Net Income $ 1,809 $ (302 ) $ 9,733 $
3,860 Provision for income taxes 1,420 (295 ) 6,276 2,634 Minority
interest in consolidated subsidiary -- -- -- 531 Interest Expense,
net of interest income 863 1,529 3,815 5,811 Depreciation and
amortization 940 926 3,738 3,479 EBITDA (a) � 5,032 � � 1,858 � �
23,562 � � 16,315 Other expenses: Stock-based compensation expense
� 139 � � -- � � 494 � � -- Adjusted EBITDA (a) $ 5,171 � $ 1,858 �
$ 24,056 � $ 16,315 (a) EBITDA and adjusted EBITDA are non-GAAP
financial measures. EBITDA is defined as net income before interest
expense (net of interest income), income taxes, depreciation and
amortization. Adjusted EBITDA is defined as net income before
interest expense (net of interest income), income taxes,
depreciation, amortization, and other items included in the caption
above labeled "Other expenses" which do not directly relate to the
ongoing operations. SSG management relies on EBITDA and adjusted
EBITDA as the primary measures to review and assess operating
performance. SSG believes it is useful to investors to provide
disclosures of its operating results on the same basis that is used
by management. Management and investors also review EBITDA and
adjusted EBITDA to evaluate SSG's overall performance and to
compare SSG's current operating results with corresponding periods
and with other companies. You should not consider EBITDA and
adjusted EBITDA in isolation or as a substitute for net income,
operating cash flows or other cash flow statement data determined
in accordance with accounting principles generally accepted in the
United States of America. Because EBITDA and Adjusted EBITDA are
not measures of financial performance under accounting principles
generally accepted in the United States of America and are
susceptible to varying calculations, they may not be comparable to
similarly titled measures of other companies. � SPORT SUPPLY GROUP,
INC. AND SUBSIDIARIES RECONCILIATION OF CASH FLOW PROVIDED BY (USED
IN) OPERATING ACTIVITIES TO FREE CASH FLOW FROM OPERATIONS AND FREE
CASH FLOW FROM OPERATIONS PER SHARE (Unaudited, in thousands) �
Fiscal Year Ended June 30, 2008 � 2007 � Net cash provided by
operating activities $ 22,884 $ 18,887 � Adjustments to reconcile
net cash provided by operating activities to free cash flow from
operations: � Capital expenditures � (1,723 ) � (2,980 ) � Free
cash flow from operations (b) $ 21,161 � $ 15,907 � � Weighted
average shares outstanding 12,122,765 10,235,308 � Free cash flow
from operations per share (b) $ 1.75 � $ 1.55 � (b) Free cash flow
from operations and free cash flow from operations per share are
non-GAAP financial measures. Free cash flow from operations is
defined as net cash provided by (used in) operating activities less
capital expenditures. Free cash flow from operations per share is
defined as net cash provided by (used in) operating activities less
capital expenditures, divided by the number of weighted average
shares outstanding. SSG management relies on free cash flow from
operations and free cash flow from operations per share as primary
measures to review and assess liquidity. SSG believes it is useful
to investors to provide disclosures of its operating results on the
same basis that is used by management. Management and investors
also review free cash flow from operations and free cash flow from
operations per share to evaluate SSG�s overall performance and to
compare SSG�s current results with corresponding periods and with
other companies. You should not consider free cash flow from
operations and free cash flow from operations per share in
isolation or as a substitute for net cash provided by (used in)
operating activities or other cash flow statement data determined
in accordance with accounting principles generally accepted in the
United States of America. In addition, free cash flow from
operations and free cash flow from operations per share do not
necessarily represent funds available for discretionary use and are
not necessarily measures of SSG�s ability to fund its cash needs.
Because free cash flow from operations and free cash flow from
operations per share are not measures of financial performance
under accounting principles generally accepted in the United States
of America and are susceptible to varying calculations, they may
not be comparable to similarly titled measures of other companies.
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