Bauer Narrows Loss in Third Quarter

Bauer said the 24 percent increase in overall revenues in the nine months of fiscal 2012 was led by strong performance in ice hockey equipment, including the VAPOR family of skates and composite sticks. BAUER continues to see solid performance in both its lacrosse and apparel product categories, which have delivered year over year revenue increases of 41 percent and 25 percent, respectively.

Revenues from the North American market grew by 22 percent in the nine month period ended Feb. 29, 2012 compared to the same period last year, while sales outside North America grew by 30 percent in the same period. Third quarter revenues grew by 7 percent due to strong growth in ice hockey equipment (14 percent) and apparel (9 percent). Revenues from the North American market were up 1 percent while sales outside North America were up 28 percent in the third quarter.

The company's third fiscal quarter falls between the major shipping months of its two selling seasons, “Back-to-Hockey” and “Holiday”. BAUER historically generates its lowest quarterly revenues and negative earnings per share during the third quarter of each fiscal year.

Adjusted Gross Profit as a percentage of revenues was 37.4 percent for the nine month period ended February 29, 2012 compared to 38.3 percent in the nine month period ended February 28, 2011. During the third quarter, Adjusted Gross Profit as a percentage of revenues decreased to 30.1 percent from 34.5 percent. The decline in Adjusted Gross Profit as a percentage of revenues during the nine month period is primarily due to the growth in composite stick sales which have lower gross profit margins compared to our other ice hockey categories, in part due to higher warranty expenses associated with composite sticks. The decline in the three month period reflects the impact from higher sales of close-out products, higher composite stick sales, and certain higher product costs.

BAUER continues to demonstrate operating leverage in SG&A where spending as a percentage of revenues has declined 260 and 250 basis points in the three and nine month periods ending February 29, 2012, respectively. Combined with the benefit from lower interest rates under the company's credit facility, Adjusted Net Income grew by 76 percent in the nine month period of fiscal 2012 to $20.8 million and Adjusted EPS increased 74 percent, or $0.28 to $0.66, compared to the same period last year. In the third quarter, Adjusted Net Loss improved by 10 percent to $4.4 million and Adjusted EPS improved by 13 percent to a loss of $0.14 per share.

BAUER also announced that booking orders for its 2012 Back-to-Hockey season increased by 12 percent over the 2011 Back-to-Hockey season to $207.3 million. Without the impact of fluctuating foreign exchange rates, Back-to-Hockey booking orders increased 14 percent over the prior year.
“After growing our revenues 28 percent in the first half of our fiscal year, we continued to grow nicely in what is traditionally our slowest quarter, with ice hockey revenues growing 14 percent. In addition, our business generated significant operating cash flow, improving 80 percent year-to-date over last year. We are looking forward to the upcoming Back-to-Hockey season where customers continue to show confidence in our products and Brands as demonstrated by our 12 percent increase in booking orders. We believe that this growth is further evidence that our performance sports platform and unique category management structure can produce continuing market share gains,” said Kevin Davis, president and chief executive officer, Bauer Performance Sports.

On a trailing twelve-month basis, revenues were $362.4 million, Adjusted Gross Profit reached $141.6 million or 39.1 percent of revenues, Adjusted EBITDA was $50.4 million, and Adjusted EPS was $0.83.

As of February 29, 2012, BAUER had working capital of $112.3 million including $4.6 million of cash compared to working capital of $78.0 million including $7.6 million of cash as of February 28, 2011. The company continued to manage its balance sheet as its leverage ratio, defined as net indebtedness divided by EBITDA, remained low at 2.85.

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 2012.

Bauer Performance Sports Ltd.'s products are marketed under the Bauer Hockey, Mission Roller Hockey and Maverik Lacrosse brand names.