Heelys, Inc. filed S-1 documents with the Security & Exchange Commission last week, signaling its intent to enter the public market. Heelys hopes to raise around $115 million in the IPO, based on papers filed with the SEC, but did not provide the number of shares to be offered or a proposed price range for the shares.
Net sales for the 2006 first half increased 177.2% to $44.6 million from $16.1 million in the year-ago period. Domestic retail customers comprised about 88.0% of sales for the six-month YTD period, versus 79.2% in the same period last year. Domestic sales increased 207.9% to $39.2 million for the first half from $12.7 million in the 2005 first half.
U.S. retail sales accounted for 1.3 million pairs of Heelys-wheeled footwear in the first half, compared to 380,000 pairs in H1 last year. The Sports Authority accounted for approximately 15.1% of total sales in the first half and Journeys delivered 12.9% of total net sales. No other retailers accounted for more than 10% of sales.
International sales increased 59.5% to $5.4 million in the first half from $3.4 million for the year-ago period, an increase Heelys said was due primarily to increased sales to distributors in Canada, the U.K. and Ireland, partially offset by decreased sales to distributors in Japan and Spain/Portugal.
Net income was $5.9 million, or 13.2% of sales, for the six months ended June 30, a 262% increase from the $1.6 million, or 10.1% of sales, in H1 last year.
For 2005, Heelys saw net sales more than double to $44.0 million, a 106.3% increase from $21.3 million in 2004. Domestic net sales increased 164.4% to $36.6 million in 2005 from $13.8 million in 2004. International net sales decreased 1.3% to $7.4 million in 2005 compared to $7.5 million in 2004, a decrease Heelys attributed to competing counterfeit and knock-off products in Asia, partially offset by increased sales to independent distributors in Canada, the U.K., Ireland and Spain/Portugal.
For the 2005 fiscal year, Big 5 Sporting Goods represented 12.3% of total net sales, while Journeys contributed 11.3% of sales, and The Sports Authority 10.6% of total net sales.
For 2005, total gross margins improved 230 basis points to 34.1% of sales, compared to 31.9% of sales in 2004. Heelys said this was due primarily to changes in the mix of products sold, lower royalty costs, a decrease in inventory reserve accruals based on actual experience, cost efficiencies derived from higher unit volumes and an increase in the quantity of products shipped directly to retail customers.
Net income was $4.3 million, or 9.9% of sales in 2005, compared to $803,000, or 3.8% of sales, in 2004.
Open order backlog was pegged at approximately $97.2 million at the end of the first half, or an increase of about 417 % compared to the approximately $18.8 million backlog at the same time last year.
The company was originally incorporated in the state of Nevada in May 2000, and since that time has operated through a wholly-owned limited partnership organized in the State of Texas. On August 25, 2006, they reincorporated as a Delaware corporation pursuant to a merger of Heeling, Inc., a Nevada corporation, into Heelys, Inc., a Delaware corporation. Heelys expects to be listed on the Nasdaq exchange under the symbol “HLYS.”
The Initial Public Offering is being underwritten by Bear, Stearns & Co. Inc., Wachovia Securities, JP Morgan, CIBC World Markets.
