CamelBak Remains Laggard at Compass Diversified in Second Quarter

Compass is a publicly traded company that specializes in buying fast-growing middle market companies and working with their owners and management to take them to the next level. Last month, it filed registration papers with the SEC for a $130 million initial public offering of Fox Factory. The company’s portfolio currently includes four branded consumer products companies and five industrial companies that make products for the defense and medical industry as well as furniture.

 

Camelbak sees military orders drop off
At Camelbak, net sales declined 22.1 percent to $34.5 million, compared to the same period in 2012. The decrease in gross sales was due largely to decreased military demand for Hydration Systems ($9.1 million), Accessories ($1.3 million) and Gloves ($1.4 million), offset in part by an increase in sales in Bottles ($1.5 million).

 

 

To a lesser extent, cooler weather patterns during the second quarter of 2013, we believe, may have caused a portion of recreational Hydration System customers as well as Accessory customers to postpone the timing of their purchases.

 

 

Sales of Hydration Systems and Bottles represented approximately 86 percent of gross sales compared to 84 percent for the same period in 2012. Military sales dropped to 27 percent of gross sales  compared to 38 percent for the same period in 2012. International sales were approximately 19 percent of gross sales   compared to 15 percent for the same period in 2012.

 

 

Gross margin decreased to 43.4 percent compared to 47.3 percent in the quarter ended June 30, 2012. The decrease was due primarily to an unfavorable sales mix in Hydration Systems during the current quarter compared to last year’s quarter.

 

 

SG&A expense decreased $0.9 million to approximately $8.7 million, but still rose to 25.1 percent of net sales compared to 21.6 percent of net sales for the same period of 2012.

 

Income from operations   was approximately $3.9 million, a decrease of $5.0 million when compared to the same period in 2012, based on the decrease in net sales and other factors described above.

Ergobaby still on a tear
Ergobaby, which makes baby carriers, had net sales reached $16.4 million, an increase of $3.1 million or 23.1 percent compared to the same period in 2012. Domestic sales were approximately $7.9 million, up $1.9 million or 31.6 percent over the corresponding period in 2012.

 

Domestic baby carrier and accessory sales increased by approximately $1.4 million, and domestic stroller sales increased approximately $0.5 million. These increases were primarily due to increased retail distribution during the quarter. International sales were approximately $8.5 million, up 16.1 percent. International baby carrier and accessory sales increased by approximately $0.7 million and stroller sales increased $0.5 million. Baby carriers and accessories represented 82 percent and 84 percent of net sales in the quarter ended June 30, 2013 and 2012, respectively.

 

Gross margin decreased 190 basis points to 61.9 percent due primarily to a higher percentage of lower margin Orbit Baby product sales and to discounts provided to customers as the Company transitions to its new logo.

 

 

Selling, general and administrative expense increased to 36.8 percent of net sales compared to 42.0 percent of net sales for the same period of 2012. The increase of $0.4 million is primarily attributable to increases in employee related costs due to increased headcount to support business growth.

 

 

Income from operations was $3.3 million compared to $2.0 million in the same period of 2012. The $1.2 million or 61.2 percent increase was due to the higher gross profit partially offset by the increase in selling, general and administrative expenses.

Fox Factory sees OEM sales grow 15.2 percent
Net sales increased approximately $9.6 million, or 15.8 percent, compared to the corresponding period in 2012. Net sales of mountain bikes and powered vehicles increased 17.7 percent and 12.3 percent respectively, during the three months ended June 30, 2013 compared to the same period in 2012. Sales growth was primarily driven by sales to OEMs, which increased $7.2 million to $54.5 million   compared to $47.3 million for the same period in 2012. The increase in net sales to OEMs is largely driven by increased specification, or spec, with our customers. The remaining increase in sales reflects increased sales to Aftermarket customers due to higher end user demand for our products.

 

Gross margins was approximately 29.0 percent compared to 27.1 percent for the same period in 2012. The increase in gross profit as a percentage of sales is primarily due to cost initiatives designed to improve operating efficiencies.

 

Selling, general and administrative expense   increased $0.6 million to approximately $8.8 million or 12.5 percent of net sales compared to $8.1 million or 13.4 percent of net sales for the same period of 2012. The increase is primarily attributable to costs incurred to support the increase in sales during the 2013 period.

 

 

Income from operations   increased approximately $3.3 million to $10.1 million compared to the corresponding period in 2012 as a result of the increase in gross profit, offset in part by increases in selling, general and administrative expenses, and other factors, as described above.

 

 

Libert Safe, which makes gun safes, generated sales of $9.4 million up  41.8 percent compared to the quarter ended June 30, 2012. Non-dealer sales reached $18.4 million, an increase of $5.3 million or 40.5 percent from the year earlier quarter. Dealer sales totaled approximately $13.5 million, compared to $9.4 million in the same period in 2012, representing an increase of $4.1 million or 43.6 percent. The increase in non-dealer sales was due in large part to increased sales to Liberty’s two largest non-dealer accounts in connection with their expansion of new stores. Liberty is the sole provider of safes to these two accounts.

In addition, the significant increase in net sales at both the non-dealer level is the result of (i) strong demand for Liberty branded product by many gun owners due to increased gun and ammunition sales resulting from expected challenges by Federal and state government to the second amendment, (ii) increased availability of import safes and safes manufactured in-house, on Liberty’s new production line and (iii) non-dealer price increases.

 

Gross margin declined 90 basis poins to 24.7 percent due primarily to increased sales of import safes that carry a lower margin and increased labor costs associated with a second manufacturing shift to keep up with demand, offset in part by non-dealer price increases.

 

 

Selling, general and administrative expense increased approximately $0.7 million compared to the same period in 2012. This increase is principally the result of increases in the following costs: (i) commission related to the increase in sales, and compensation expense of $0.2 million, (ii) co-op advertising and national advertising totaling $0.3 million, (iii) other miscellaneous costs of $0.2 million, including depreciation, travel, legal, and other costs.

 

Income from operations increased $1.7 million compared to the same period in 2012, principally as a result of the increase in net sales and other factors, as described above.