Jarden Corporation reported a record first quarter of 2006, due in large part to success in their Outdoor Solutions segment, which is made up almost entirely of the Coleman brand. Outdoor Solutions sales for the quarter increased 24.7% to $228.1 million compared to $182.9 million last year. Organic sales increased 5.5%. Due to this stronger-than-expected growth combined with lower than anticipated cost pressures, particularly from raw materials, Outdoor Solutions exceeded top and bottom-line internal expectations.
Operating earnings in the division increased 85.5% to $12.8 million. As a percentage of sales, operating margins increased 190 basis points to 5.6% of sales, compared to 3.7% of sales last year. In spite of the strong operational results, profitability of the division was said to be down moderately due to negative foreign exchange impact and raw material cost increases compared to Q1 2005. During a conference call with analysts and the media, Jarden management described 2006 as a transition year for the Coleman business. The building of a major new product development pipeline is well underway, with a focus on expanding “up-the-mountain category” for specialty retailers.
Coleman expects launching new products into the specialty channel will create a new product pipeline of items that can work their way into other distribution channels over their lifecycle. Year-over-year profitability should be marginally higher than last year and margins will start to build in 07 and 08, as the positive effect of higher-margin new products and a more stable cost environment kick in. In addition, Jarden has been looking for tuck-in acquisitions to add to the Coleman pipeline and enhance the margins in their outdoor business.
