Bauer Performance Sports Ltd. (TSX:BAU) ("BAUER" or the "Company")
today announced financial results for the second quarter and six
months of Fiscal 2013 ended November 30, 2012. All figures are
expressed in U.S. dollars.
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Three months Six months
US$ 000,000's except per share ended ended
data and % November 30 November 30
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Change Change
vs. vs.
prior prior
2012 2011 year 2012 2011 year
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Revenue $109.6 $100.3 9% $257.9 $242.7 6%
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Gross Profit 38.4 33.6 14% 98.7 93.1 6%
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Adjusted Gross Profit(i) 39.7 34.2 16% 100.7 94.4 7%
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Adjusted EBITDA(i) 14.2 9.3 53% 52.1 44.2 18%
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Net Income (loss) 6.1 8.2 (26)% 22.1 30.9 (29)%
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Adjusted Net Income(i) 7.3 4.4 64% 30.2 25.3 19%
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Earnings per share (diluted) $ 0.16 $ 0.26 (38)% $ 0.61 $ 0.98 (38)%
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Adjusted EPS(i) $ 0.20 $ 0.14 43% $ 0.84 $ 0.80 5%
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(i)Note: Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income 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 MD&A for the second quarter.
Revenues grew by 6% (9% excluding the impact of foreign
exchange) to $257.9 million in the first half of Fiscal 2013 led by
strong performance in several ice hockey equipment categories
driven by recent new product launches. The new BAUER RE-AKT helmet
helped drive 16% growth in helmets, while the success of the new
BAUER NEXUS product line helped drive 11% growth in
under-protective category revenues. Partially offsetting these
gains was a 7% decline in goalie revenues due to the earlier launch
of the new goalie product line in the 2012 Back-to-Hockey season as
compared to the prior year. Lacrosse revenues increased
significantly driven by the addition of sales from the recently
acquired Cascade Helmets Holdings, Inc. ("Cascade") and apparel
revenues grew by 27% driven by BAUER's new line of performance
apparel and bags. Overall revenues from the North American market
grew by 6% in the six month period ended November 30, 2012 compared
to the same period last year, while sales outside North America
grew by 8% in the same period. Second quarter revenues grew by 9%
(10% excluding the impact of foreign exchange) due to the addition
of Cascade and Inaria International, Inc. ("Inaria") revenues and
continued growth in ice hockey equipment and related apparel
categories, partially offset by lower sales to NHL teams as a
result of the NHL lockout. Notably, apparel revenues were up 50% in
the quarter (43% excluding the impact of Inaria). Revenues from the
North American market were up 11% while sales outside of North
America were up 5% in the second quarter.
Adjusted Gross Profit in the six month period ended November 30,
2012 increased by $6.3 million, or 7%, to $100.7 million. Adjusted
Gross Profit as a percentage of revenues increased slightly to
39.0% for the six month period ended November 30, 2012 compared to
38.9% in the six month period ended November 30, 2011. During the
second quarter of Fiscal 2013, Adjusted Gross Profit increased by
$5.5 million, or 16%, to $39.7 million and Adjusted Gross Profit as
a percentage of revenues increased to 36.2% from 34.1%. The
increase in Adjusted Gross Profit as a percentage of revenues for
the quarter and first half of Fiscal 2013 was driven by higher
margins on ice hockey equipment, the impact of the Cascade
acquisition and favourable other cost of goods sold, partially
offset by the impact of higher product costs and unfavourable
foreign exchange.
Year-to-date Adjusted Net Income increased by $4.9 million, or
19%, to $30.2 million and second quarter Adjusted Net Income
increased by $2.9 million, or 64%, to $7.3 million. The increase in
Adjusted Net Income was driven by the increase in Adjusted Gross
Profit, continued benefits of operating leverage in selling,
general and administrative expenses, and a favourable impact from
the Company's hedging activities.
Adjusted EPS increased 5%, or $0.04, to $0.84 for the six months
ended November 30, 2012 compared to the same period last year and
second quarter Adjusted EPS increased 43%, or $0.06, to $0.20.
Fiscal 2013 Adjusted EPS includes an unfavourable impact from the
higher number of common shares outstanding as a result of the share
offering in June to fund the Cascade Acquisition making our Q1 and
YTD Fiscal 2013 Adjusted EPS figures not directly comparable to the
prior year. Excluding the impact of the Cascade Acquisition, YTD
Adjusted EPS would have been approximately $0.88 or a 10% increase
over the prior year. For the full fiscal year the Company currently
expects the Cascade acquisition to be accretive to Adjusted EPS,
however due to the seasonality of Cascade's business - a
significant amount of Cascade's income is generated during the
second and third fiscal quarters of the BAUER's fiscal year - the
income from Cascade in the first fiscal half does not yet offset
the dilutive impact of the higher number of common shares
outstanding.
"BAUER continues to deliver strong results in hockey, lacrosse
and our related apparel businesses," said Kevin Davis, President
and Chief Executive Officer, Bauer Performance Sports. "Our newly
launched hockey equipment products and our further investment into
both apparel and lacrosse are key ingredients to our current and
future success. We expect that these investments, combined with our
comprehensive marketing strategy and recently launched brand
building initiatives, will continue to fuel our exceptional
performance. Like the millions of hockey fans around the world, we
are excited that the National Hockey League is returning to action.
Bauer Hockey maintains an important and valuable relationship with
both the NHL and its players, and the recent agreement is welcome
news for everyone involved."
The Company continued to deleverage as its leverage ratio,
defined as net indebtedness divided by EBITDA, was 2.69 as of
November 30, 2012 compared to 2.73 as of November 30, 2011. As of
November 30, 2012, BAUER had working capital of $215.1 million
compared to working capital of $179.6 million as of November 30,
2011, an increase of 20%. This increase was driven by the
acquisitions of Cascade and Inaria, and sales growth of 18%, 4%,
and 9% in the three most recent quarters (which include the entire
"Back to Hockey" 2012 booking season).
Other Recent Highlights
-- During the week of October 1, 2012 the Company held its annual BAUER
World event, where leading retailers from around the world were able to
see and experience the newest BAUER gear, including BAUER's latest VAPOR
line of skates, new team apparel and a new line of goalie equipment. In
addition to unveiling new products, the Company also launched several
key corporate initiatives including:
-- An objective to grow hockey participation by 1 million new players
by 2022 through a unique multi-year program. Partnering with Hockey
Canada, USA Hockey, and led by a cross-functional team, including
Mark Messier, who joined forces with BAUER as a result of the
Company's recent acquisition of Cascade, the initiative will take a
leadership role in both growing participation and increasing player
safety.
-- The unveiling of the "OWN THE MOMENT" brand campaign, a fully
integrated global initiative that focuses on the numerous moments in
hockey that make the sport truly unique and special. The campaign is
the first BAUER brand campaign in more than 15 years.
-- On October 16, 2012 BAUER closed the acquisition of substantially all of
the assets of Inaria, a global provider of team sports and active
apparel for Cdn$7 million in cash. The acquisition marks the Company's
entrance into the growing jersey market and provides BAUER with full
team apparel capabilities, including the design, development and
manufacturing of uniforms for ice hockey, roller hockey, lacrosse,
soccer and other team sports, enabling the Company to become a "one-
stop-shop" for its global retail partners' equipment and team apparel
needs, for both ice hockey and lacrosse.
-- On October 17, 2012 funds managed by Kohlberg Management VI, LLC (the
"Kohlberg Funds"), BAUER's largest shareholder, completed the sale of an
aggregate of 4,140,000 common shares of the Company (the "Offering") at
a price of Cdn$9.90 per share. A syndicate of underwriters completed the
Offering on a bought deal basis. BAUER did not receive any proceeds from
the Offering. Immediately following closing, the Kohlberg Funds owned
the equivalent of 41.0% of the issued and outstanding common shares on a
non-diluted basis (approximately 33.8% on a fully diluted basis).
Adjusted Gross Profit, EBITDA, 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" noted below and in the Company's
MD&A for the most recent period. Working capital as used above
includes trade and other receivables, inventories, and trade and
other payables.
The Company's unaudited condensed consolidated interim financial
statements and MD&A for the period ended November 30, 2012 have
been filed with applicable regulatory authorities and are available
on SEDAR at www.sedar.com and on the Company's website.
CONFERENCE CALL AND WEBCAST
BAUER will hold its conference call to discuss its financial and
operating results on January 10, 2013 at 10:00 am ET. Kevin Davis,
President and CEO and Amir Rosenthal, Chief Financial Officer will
host the call. Following management's presentation, there will be a
question and answer session for analysts.
To access the call, please dial 1-888-437-9445 or
1-719-325-2429. 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 January 10, 2013, until midnight ET, January 24, 2013. To
access the replay, dial 1-877-870-5176 or 1-858-384-5517, followed
by passcode 6094323.
To participate in the live audio webcast, please visit the
Company's website at www.bauerperformancesports.com. The webcast
will also be archived on the Company's website.
ABOUT BAUER PERFORMANCE SPORTS LTD.
Bauer Performance Sports Ltd. (TSX:BAU) is a leading developer
and manufacturer of ice hockey, roller hockey, and lacrosse
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 Hockey,
Mission Roller Hockey, Maverik Lacrosse, Cascade, and Inaria 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, EBITDA, 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, and (iii) reserves established to
dispose of obsolete inventory acquired from acquisitions. 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, 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
second quarter of Fiscal 2013.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements within
the meaning of applicable securities laws. 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
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 of sports 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, inability to translate order bookings into
realized sales, 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 29, 2012
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 news 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.
Contacts: INVESTOR INQUIRIES Bauer Performance Sports Ltd. Chief
Financial Officer 603-610-5802investors@bauerperformancesports.com
Spinnaker Capital Markets Inc. Kevin O'Connor / Ali Mahdavi
416-962-3300ko@spinnakercmi.com MEDIA INQUIRIES Tory Mazzola Global
Communications Manager 603-610-5908media@bauer.com
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