Bauer’s Q3 Losses Narrow

The 6 percent increase in overall revenues in the nine months of Fiscal 2013 was led by strong performance in several ice hockey equipment categories, and solid performance in both the Company’s lacrosse and apparel product categories. Performance in the lacrosse category has been positively impacted by the Cascade Helmets (“Cascade”) acquisition and the apparel category has seen growth in every category, including team apparel, which has benefitted from both organic growth and the acquisition of Inaria International (“Inaria”).

Third quarter revenues grew by 7 percent due to strong growth in apparel across all apparel categories, with lifestyle (+51 percent), performance (+56 percent), and team apparel (+14 percent organic, +53 percent including Inaria) all showing strong increases, and the addition of Cascade revenues, partially offset by lower ice hockey equipment revenue. The Company’s third fiscal quarter falls between the major shipping months of its two selling seasons, “Back-to-Hockey” and “Holiday” and as such relies heavily on repeat orders to fill in retailer needs. Ice hockey equipment sales in the quarter were slightly lower than the prior year due to lower sales of closeout inventories, a slight decline in goalie sales resulting from a shift in the timing of product launches as compared to the prior year, and excess competitor inventory in the market that reduced retailer open to buy for repeat orders.

Adjusted Gross Profit in the nine-month period ended February 28, 2013 increased by $7.2 million, or 6.6 percent to $117.1 million. In the three and nine month periods in Fiscal 2013, Adjusted Gross Profit as a percentage of revenues was consistent with the levels reported in the comparable periods in Fiscal 2012.

BAUER continues to demonstrate operating leverage in SG&A. Excluding expenses associated with the integration of acquisitions and secondary share offerings, SG&A as a percentage of revenues has declined 30 basis points in both the three and nine month periods ending February 28, 2013.

Adjusted Net Income grew by 25 percent in the nine-month period of Fiscal 2013 to $26.0 million and Adjusted EPS increased 9 percent, to $0.72, compared to the same period last year. In the third quarter, Adjusted Net Loss improved by 5 percent to $4.2 million and Adjusted EPS improved 21 percent, to a loss of $0.11 per share.

BAUER also announced that booking orders for its 2013 Back-to-Hockey season increased by 2 percent over the 2012 Back-to-Hockey season to $188.7 million. The increase is notable as this year’s Back-to-Hockey bookings include only the launch of VAPOR family of products, whereas two families of products (NEXUS and SUPREME) were launched at the same time in 2012. See “Booking Orders” further below.

“We continue to demonstrate the strength of our platform and derive benefits from our recent lacrosse and apparel acquisitions as our revenue and profits strengthened in the traditionally challenging third quarter. We are extremely pleased with our continued growth driven by our geographic and product diversification,” said Kevin Davis, President and Chief Executive Officer, Bauer Performance Sports. “Our growth in hockey booking orders from only one product family in the upcoming Back-to-Hockey season versus the two families a year ago is remarkable as is the immediate acceptance of our team apparel initiative following our Inaria acquisition,” added Davis.

On a trailing twelve-month basis, revenues were $393.3 million, Adjusted Gross Profit reached $152.3 million or 38.7 percent of revenues, Adjusted EBITDA was $57.8 million, and Adjusted EPS was $0.87.

The Company continued to deleverage as its leverage ratio, defined as net indebtedness divided by EBITDA, was 2.76 as of February 28, 2013 compared to 2.85 as of February 29, 2012. As of February 28, 2013, BAUER had working capital of $160.1 million compared to working capital of $136.4 million as of February 29, 2012, an increase of 17 percent. This increase was driven by the acquisitions of Cascade and Inaria, the impact of foreign exchange, and our year-to-date revenue growth.

Recent Events/Highlights

    In March 2013, BAUER announced that it has become the new official uniform, equipment and apparel provider for the British Columbia Hockey League (BCHL), one of the top junior organizations in North America. This exclusive three-year partnership starting with the 2013-14 season will include uniforms, equipment and apparel for the BCHL’s approximately 360 players, and is a significant step forward for BAUER’s new but growing team apparel program. The Company is now a one-stop shop for associations, teams and leagues at any level around the world, with the ability to provide uniforms as well as high performance equipment.

    On March 21, 2013, the Canadian government announced that it will reduce import tariffs on certain hockey equipment effective as of April 1, 2013. Prior to April 1, 2013, the Company’s tariffs on hockey equipment imported into Canada were up to 18 percent and were included in the Company’s cost of goods sold. BAUER is currently assessing the impact of this change and it is the Company’s expectation that in due course the lower tariffs will result in lower pricing to its customers on affected products but will have limited impact on profitability, as the reduction in the costs of goods sold will be passed on to retailers.

Adjusted Gross Profit, EBITDA, 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” noted below and the Company’s MD&A for the third quarter of Fiscal 2013.