The Hockey Company Holdings Inc. (“Company”) announced today its financial results for the nine months ended September 30, 2003. Net sales for the nine months ended September 30, 2003 were $171.2 million, an increase of $19.8 million or 13.1% compared with last year. Gross margin grew by $9.8 million or 14.6% to $76.9 million or 44.9% of sales compared with 44.3% in 2002. EBITDA amounted to $38.8 million, including a foreign exchange gain on long-term debt of $10.2 million, compared with $23.3 million a year ago, in which there was also an exchange gain on the debt of $0.5 million. Net income amounted to $13.9 million or $1.52 per share compared with $1.9 million or $0.26 per share in 2002.
Net sales for the three months ended September 30, 2003 were $81.1 million, an increase of $8.4 million or 11.6% compared with last year. Gross margin grew by $3.9 million or 12.2% to $35.8 million or 44.1% of sales compared with 43.9% in 2002. EBITDA amounted to $18.2 million, including a foreign exchange gain on long-term debt of $0.2 million, compared with $13.1 million a year ago, in which there was an exchange loss on the debt of $2.3 million. Net income amounted to $8.5 million or $0.71 per share compared with $5.9 million or $0.82 per share in 2002.
The Company reports its results in United States currency. However, because it is established internationally and operates in local currencies, foreign exchange rate fluctuations play a part in the reported results. Sales for nine months have been positively impacted by approximately $14 million compared with a year ago on a constant dollar basis. Similarly, operating and other expenses are negatively impacted, mitigating the overall impact on the Company's reported earnings. The foreign exchange gain on the long-term debt amounted to approximately $8.0 million on an after-tax basis in the nine months ended September 2003.
The trends evident in the first half of the year continued into the third quarter, with growth in the equipment business of 15% being the main revenue driver. Apparel sales in the third quarter grew about 4% compared with a year ago, and on a year to date basis are at about the same level as the prior year, having been impacted in the first half of the year by the small market teams making the playoffs and negatively affecting sales of replica jerseys. Margins remained strong in both segments. Geographically, Canada and Europe continue to demonstrate strength while the United States economy provides greater challenge.
Matthew H. O'Toole, President and Chief Executive Officer said, “I am pleased with our overall performance this quarter. We have had significant growth in profitability and continue to exceed our plan for the year. Our initiatives in product innovation have resulted in market acceptance of the Company's 2003 new product introductions. Both the CCM Vector one-piece composite hockey stick and the CCM Pro Tack ice skate have been well received by elite players and retailers alike.”
“In August we completed the acquisition of Roger Edwards Sport Ltd. which will position us well for future growth in the retro-inspired apparel segment. Meanwhile, our core hockey jersey business continues to deliver solid results after a slow playoff season” O'Toole continued. “The biggest challenge in the apparel business has been the difficult retail conditions in the United States, and we do not foresee a change to these conditions in the fourth quarter.”
“Overall, the strong quarter bodes well for us and we believe that we will have another solid year and significantly exceed last year's results. We also have several exciting new products ready for introduction in 2004 that will continue to reinforce The Hockey Company's position as a leader in product innovation and the number one manufacturer of hockey equipment and related apparel in the world.”
