Easton-Bell Sports, Inc. had modest sales growth during the third quarter of 2012 as net sales increased to $213.3 million as compared to $212.5 million of net sales for the previous year, and gross margin increased by 10 bps to 35.7 percent from 35.6 percent.
“Our product innovation, margin enhancement and investment strategies continued to allow us to gain market share in key product categories and strengthen our financial results, despite the impact of the economy and softness in the global snow market,” said Paul Harrington, president and CEO.
Team Sports net sales increased $7.2 million or 6.2 percent in the third quarter of 2012, as compared to the third quarter of 2011, or 6.4 percent on a constant currency basis. The increase was due to continued market share gains driving double-digit growth in sales of Riddell football products and increased sales of Easton Mako hockey sticks introduced earlier in the year. These gains were partially offset by lower sales of Easton baseball bats as last year benefited from the non-recurring BBCOR bat transition.
Action Sports net sales decreased $6.4 million or 6.7 percent in the third quarter of 2012, as compared to the third quarter of 2011, or 6.5 percent on a constant currency basis. The decrease primarily resulted from the weather-related, double-digit decline in sales of Giro snow products in both the U.S. and Europe, and was partially offset by sales growth in Bell powersports helmets from expanded product offerings and distribution.
The company’s strategic focus on margin enhancement coupled with sales of higher-margin Team Sports products was partially offset by off-price inventory sales and resulted in 10 bps of margin growth for the quarter.
The company’s operating expenses increased $2.1 million or 3.8 percent and 80 bps as a percentage of net sales during the third quarter to support the sales growth and fund product innovation.
Balance sheet items
Easton-Bell ended the quarter with $148.7 million in inventory, up 2.2 percent from the third quarter ended Oct. 1, 2011.
The company had substantial borrowing capability as of September 29, 2012, with $190.2 million of additional borrowing ability under the revolving credit facility and liquidity of $226.0 million when including the $35.8 million of cash.
Easton-Bell Sports, Inc. markets and licenses products under such well-known brands as Easton, Bell, Giro, Riddell and Blackburn.
EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited and amounts in thousands)
|Fiscal Quarter Ended||Three Fiscal Quarters Ended|
|October 1, |
|October 1, |
|Cost of sales||137,076||136,808||419,415||417,137|
|Selling, general and administrative expenses||56,354||54,294||168,798||156,681|
|Amortization of intangibles||2,597||2,339||7,791||7,240|
|Income from operations||17,302||19,026||47,673||46,720|
|Interest expense, net||11,112||10,635||32,235||32,728|
|Income before income taxes||6,190||8,391||15,438||13,992|
|Income tax expense||2,531||3,713||6,721||6,430|
|Other comprehensive income:|
|Foreign currency translation adjustment||2,593||(4,398||)||1,065||(3,125||)|