Riddell Bell Sees Double Digit Organic Growth in Second Quarter…

Riddell Bell Holdings second quarter net sales increased 208.0% over last year, primarily due to the acquisition of Bell Sports, posting revenues of $103.8 million in the quarter ended July 2, compared to $33.7 million in Q2 last year for just the Riddell “Team Sports” business. The decline in gross margin for the period was due to the inclusion of Individual Sports, which has lower product margins than Team Sports products and services. Gross profit for Team Sports improved 110 basis points to 45.7% due to lower shipping and distribution costs as a result of the restructuring of their operations.

During the first quarter, Riddell Bell Holdings announced that the company would be undergoing some restructuring. RBH outsourced manufacturing of the majority of its parts and components previously produced at its Chicago facility, which was closed last quarter. RBH has signed a contingent contract for the sale of this facility, which is scheduled to be complete by December 2005 and is expected to result in estimated net proceeds of $2.1 million. The company also transferred critical key assembly and distribution operations to other existing facilities in Elyria, Ohio and Rantoul, Illinois.

As a result of the acquisition of Bell Sports and this recent restructuring, RBH saw SG&A expenses fall 520 basis points to 23.7% of sales compared to 28.8% last year for just the Team Sports segment. Team Sports operating income was up 35.0% for Q2 to $7.3 million, compared to $5.4 million in the year-ago period. The Individual Sports segment posted $8.5 million in operating income in Q2 2005. RBH’s reported net income was $3.5 million in Q2 compared to $1.2 million for the second fiscal quarter of 2004.

>>> At what point will the synergies make up for the GM drag on the business???