Collegiate Pacific Inc. saw fiscal third quarter net sales increase 120% to $59.4 million from $27.0 million for the same period last year. The more than double sales increase was attributed to acquisitions and double-digit organic sales growth. Net income for the quarter increased 56.5% to $1.2 million or diluted earnings per share of 12 cents.
Michael J. Blumenfeld, Chairman and CEO of Collegiate Pacific stated: “We are pleased to report significant increases in net sales, operating profit and fully diluted earnings per share for the third fiscal quarter. To achieve this substantial increase in profitability while absorbing the final costs of our S-3 registration process, which was completed in February, is most gratifying and a tribute to our hard working employees across the country.”
Adam Blumenfeld, President of Collegiate Pacific stated: “We are extremely pleased with operations for the quarter. The 120% increase in sales for the quarter was underscored by double digit organic sales growth for businesses owned at least 12 months – suggesting continued strong demand from our core base of customers. Our catalog group and team dealer group (Dixie, OTS, Kesslers and Salkeld – “DOKS”) contributed to the significant, sequential gross margin improvement in the quarter to 35.3%. Margins increased sequentially by approximately 200 basis points over Q206 and actually surpassed Q305 on a comparative basis by 20 basis points. This accomplishment is meaningful as the Company acquired several businesses which carry historically lower gross margins (28-32% range) within the last 12 months. This margin strength and improvement, we believe, is a testament to successful implementation of pricing and selling strategies across our catalog and DOKS road sales groups, effective cross selling of our high margin proprietary products through our road sales professionals, and the effects of our continuing efforts at reducing cost of goods. We are particularly pleased to have demonstrated such margin enhancement during a period of inflated fuel and raw material costs worldwide. It speaks, we believe, to our continued ability to attract and retain customers through the company's bundling of proprietary services and products such as 24-hour quick shipping and best of breed Internet technology – reducing the customers' focus and dependency on price.”
“The company continues to review new product lines, new business development relationships, and acquisition targets, which may either extend our geographic reach or provide unique product and/or brands that allow for deeper, vertical penetration into our marketplace. We intend to continue to leverage our position as the nation's largest one-stop shop for sporting goods equipment and team uniforms to the institutional market.”
Company Announces Sales Force Expansion Plans
Mr. Adam Blumenfeld continued: “Given the growing success and managerial talent of our DOKS road sales team, the company is embarking upon a long term aggressive salesman acquisition plan to bolster the size and geographic reach of its 175 man sales force. Over a multi year period, the company seeks to add seasoned sales teams and/or individuals that can contribute to revenues and earnings on a near immediate basis. Our management infrastructure has proven capable of effectively managing growth in existing territories and we will now look to expand this footprint – thereby bringing our combination of factory direct equipment and branded team uniforms to a broader swath of high schools and colleges across the country.”
COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------- --------------------------
2006 2005 2006 2005
---- ---- ---- ----
(As restated)
Net sales $59,417,658 $27,018,429 $171,093,834 $78,523,315
Cost of sales 38,420,621 17,544,088 113,639,708 52,012,219
------------ ------------ ------------- ------------
Gross profit 20,997,037 9,474,341 57,454,126 26,551,096
Selling, general
and administrative
expenses 17,252,696 7,484,598 49,180,817 20,149,485
------------ ------------ ------------- ------------
Operating
profit 3,744,341 1,989,743 8,273,309 6,361,611
------------ ------------ ------------- ------------
Other income (expense):
Interest
income 25,005 179,288 99,343 237,732
Interest
expense (1,261,064) (899,372) (3,378,970) (1,240,891)
Other income 155,198 32,774 243,671 153,337
------------ ------------ ------------- ------------
Total other
(expense) (1,080,861) (687,310) (3,035,956) (849,822)
------------ ------------ ------------- ------------
Income before
minority
interest in
income of
consolidated
subsidiary
and income
taxes 2,663,480 1,302,433 5,237,353 5,511,789
Income tax
provision 787,326 514,772 1,813,376 2,266,426
Minority interest
in income of
consolidated
subsidiary, net
of tax 643,856 -- 587,665 --
------------ ------------ ------------- ------------
Net income $1,232,298 $787,661 $2,836,312 $3,245,363
============ ============ ============= ============
Weighted average number of shares
outstanding:
Basic 10,183,973 10,094,747 10,174,843 10,002,640
============ ============ ============= ============
Diluted 10,359,528 10,410,933 10,389,740 10,277,970
============ ============ ============= ============
Net income per
share common
stock - basic $0.12 $0.08 $0.28 $0.32
============ ============ ============= ============
Net income per
share common
stock - diluted $0.12 $0.08 $0.27 $0.32
============ ============ ============= ============
Dividends declared
per share common
stock $0.025 $0.025 $0.075 $0.075
============ ============ ============= ============
