Bauer’s Sales Grow 13 Percent in Fourth Quarter

Bauer Performance Sports Ltd. reported revenues grew 13 percent in the fourth quarter and 19 percent in its fiscal year ended May 31. Earnings also grew solidly in both periods excluding costs related to its initial public offering.

Fiscal Year Ended May 31, 2011

Net revenues increased 19 percent to $306.1 million, up from $257.4 million in 2010. Gross profit improved by 34 percent to $119.1 million (38.9 percent of net revenues) compared to $89.1 million (34.6 percent of net revenues) in 2010.

Adjusted EBITDA grew 42 percent to $43.5 million compared to $30.7 million during the same period in 2010. Net income increased $17.6 million to $16.7 million compared to a net loss of $0.9 million in 2010 excluding costs related to the company's 2011 initial public offering (“IPO costs”) and unrealized (non-cash) losses/gains on foreign exchange in both years. Including these items, reported net income declined to $0.4 million compared to $2.4 million in 2010.

Basic and diluted earnings per share excluding IPO costs and unrealized loss/gain on foreign exchange in both years increased $0.58 to $0.55 in 2011 from a net loss per share of $0.03 in 2010. Including these items, reported earnings per share (“EPS”) decreased to $0.01 in 2011 from $0.08 in 2010.

In conjunction with the IPO, the company recapitalized its short and long-term debt, reducing interest expense by approximately $1 million per quarter (pre-tax). The net income and EPS figures cited herein have not been adjusted to reflect this benefit for periods prior to March 10, 2011, the effective date of the IPO.

Bauer increased its ice hockey equipment market share to 49 percent from 45 percent in 2010.

Fourth Quarter Ended May 31, 2011

Net revenues increased 13 percent to $68.2 million from $60.2 million in the same period of the prior year. Gross profit rose 22 percent to $30.8 million (45.2 percent of net revenues) compared to $25.3 million (42.0 percent of net revenues) in the fourth quarter of 2010.

Adjusted EBITDA improved 22 percent to $10.1 million compared to $8.3 million during the fourth quarter of 2010.

Net income increased $4.9 million to $3.4 million, up from a net loss of $1.5 million in the fourth quarter of 2010 excluding IPO costs and unrealized gains on foreign exchange in both periods. Including these items, reported net loss was $2.2 million compared to net income of $1.2 million in the fourth quarter of 2010.

Basic and diluted EPS excluding IPO costs and unrealized gains on foreign exchange in both periods increased $0.16 to $0.11 from a net loss per share of $0.05 in the fourth quarter of 2010. Including these items, reported net loss per share was $0.07, a decrease from EPS of $0.03 in the fourth quarter of 2010.

The company relocated its headquarters from Greenland, New Hampshire to Exeter, New Hampshire.

“In the fourth quarter, Bauer Performance Sports achieved strong revenue growth, fueled by the release of new products, including our most advanced skate ever, the Vapor APX,” said Kevin Davis, President and Chief Executive Officer. “We remain focused on executing our growth strategies and are well positioned to support continued growth and ongoing investments in our business. In 2011, our ice hockey equipment market share increased to a record 49 percent, demonstrating strong consumer demand for Bauer products.”

Ice hockey equipment net revenues rose 17 percent for the twelve-month period, supported by strong performance in all regions. Apparel net revenues increased by 22 percent in the twelve-month period due to the introduction of Bauer's new protective apparel line, as well as increased sales of team apparel. Also contributing to net revenue growth for 2011 are net revenues for roller hockey, which increased by 15 percent. For both the fourth quarter and fiscal year, net revenue growth was also supported by sales of Maverik® lacrosse equipment and related apparel which was not offered by the company in 2010.

Adjusted EBITDA for the fiscal year ended May 31, 2011 increased 42 percent to $43.5 million, driven by increases in net revenues and gross profit. Without the IPO costs and unrealized loss/gain on foreign exchange in both years, net income was $16.7 million in 2011 compared to a net loss of $0.9 million in 2010. EPS before IPO costs and unrealized loss/gain on foreign exchange increased to $0.55 from a net loss per share of $0.03 in 2010. Reported net income declined 83 percent to $0.4 million, including $10.6 million (pre-tax) in IPO costs and an unrealized loss on foreign exchange of $12.4 million (pre-tax) compared to an unrealized gain on foreign exchange of $4.8 million (pre-tax) in 2010. Reported EPS decreased to $0.01 in 2011 from $0.08 in 2010.

Adjusted EBITDA for the fourth quarter increased by $1.8 million to $10.1 million, or 22 percent over the prior year driven by increases in net revenues and gross profit. Without the IPO costs and unrealized gains on foreign exchange in both years, net income was $3.4 million, up from a net loss of $1.5 million in the fourth quarter of 2010. EPS before IPO costs and unrealized gains on foreign exchange increased to $0.11 from a net loss per share of $0.05 in the fourth quarter of 2010. Reported net loss for the fourth quarter declined to $2.2 million, from net income of $1.2 million last year, including $9.0 million (pre-tax) in IPO costs and an unrealized gain on foreign exchange of $0.8 million (pre-tax) in the fourth quarter of 2011 as compared to an unrealized gain on foreign exchange of $4.0 million (pre-tax) in the same period of 2010. Reported net loss per share in the fourth quarter of 2011 was $0.07 compared to EPS of $0.03 in the same period in 2010.

Adjusted EBITDA is a non-Canadian GAAP measure. For a definition and reconciliation of net income to Adjusted EBITDA, please refer to the company's annual MD&A filed on SEDAR.

The company has not elected hedge accounting and therefore changes in the fair value of foreign exchange swaps, foreign currency forward contracts and interest rate contracts are reflected in current period earnings.