Easton-Bell Sports, Inc., which markets and licenses sporting goods under the Easton, Bell, Giro, Riddell and Blackburn brands, reported net sales surged 16.9 percent in the fourth quarter as it shipped baseball, softball and other spring sports items earlier than a year ago. Gross margin increased by 180 bps to 35.2 percent and Adjusted EBITDA increased by $6.0 million or 31.9 percent.



The company had net sales of $834.9 million for fiscal 2011, an increase of 8.0 percent as compared to $772.8 million of net sales for fiscal 2010. For the year, gross margin remained at 34.0 percent, and Adjusted EBITDA increased by $3.0 million or 3.1 percent to $98.2 million.

 
“We continue to perform as planned and meet our sales, investment and earnings goals,” said President and CEO Paul Harrington. “Our product innovations are contributing to sequential improvement in our business and are helping us build momentum for the future. I am proud of the dedication our team continues to show in driving our business forward.”


Team Sports
Team Sports net sales increased $24.2 million, or 25.3 percent for the fourth quarter of 2011, as compared to the fourth quarter of 2010 driven by market share gains with Riddell football helmets, growth in reconditioning services and increased sales of Easton baseball and softball bats, partially due to shifting product launches for baseball and softball bats to the back half of this year versus the first half last year to better coincide with the retail selling season.

 

For fiscal 2011, Team Sports net sales increased $45.5 million or 10.7 percent as compared to fiscal 2010, or a 10.2 percent increase on a constant currency basis.

Action Sports
Action Sports net sales increased $5.8 million, or 7.1 percent for the fourth quarter of 2011, as compared to the fourth quarter of 2010 from increased sales of cycling helmets and accessories, sales of Giro cycling shoes which were introduced earlier in the year and increased sales of power sports helmets driven by new product launches.

 

For fiscal 2011, Action Sports net sales increased $16.6 million, or 4.8 percent as compared to fiscal 2010, or a 4.2 percent increase on a constant currency basis.

The 180 bps of margin improvement in the fourth quarter of 2011 related primarily to the strong sales growth in football helmets, baseball and softball bats and cycling helmets. For fiscal 2011, the margin improvement from strong product launches and sales growth in higher-margin products was offset by the negative impact on snow helmet sales from overall softness in the global market and close-out sales of ice hockey equipment.


The company’s operating expenses increased $7.7 million or 16.2 percent during the fourth quarter of 2011 and were 26.4 percent of net sales, as compared to 26.5 percent of net sales for the fourth quarter of 2010. For fiscal 2011, operating expenses increased $20.0 million or 10.4 percent and were 25.3 percent of net sales as compared to 24.8 percent for fiscal 2010. The increase for both the fourth quarter and full year related to planned investments in product development and brand marketing initiatives, higher variable selling expenses associated with the sales growth, and increased legal costs.


The company’s Adjusted EBITDA was $24.8 million for the fourth quarter of 2011, an increase of $6.0 million or 31.9 percent as compared to the fourth quarter of 2010. For fiscal 2011, Adjusted EBITDA was $98.2 million, an increase of $3.0 million, or 3.1 percent, as compared to Adjusted EBITDA for fiscal 2010. A detailed reconciliation of Adjusted EBITDA to net income, which the company considers to be the most closely comparable GAAP financial measure, is included in the section entitled “Reconciliation of Non-GAAP Financial Measures,” which appears at the end of this press release.


Balance Sheet Items
Net debt totaled $359.2 million (total debt of $388.7 million less cash of $29.5 million) as of Dec. 31, 2011, a decrease of $1.9 million compared to the net debt amount as of January 1, 2011. Working capital as of Dec. 31, 2011 was $265.9 million as compared to $242.6 million as of Jan. 1, 2011. The increase in working capital primarily results from the increase in accounts receivable and inventory to support the sales growth, partially offset by the increase in accounts payable related to timing of payments.

 
The company had substantial borrowing capacity and liquidity as of Dec. 31, 2011, with $190.9 million of additional borrowing availability under the revolving credit facility and liquidity of $220.4 million when including $29.5 million of cash.

 

 
















































































































































































































































































































EASTON-BELL SPORTS, INC. AND SUBSIDIARIES


 


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


(Unaudited)



Fiscal Year Ended


Fiscal Year Ended


Fiscal Year Ended


December 31,


January 1,


January 2,


2011


2011


2010

(Amounts in thousands)
Net sales $ 834,910 $ 772,843 $ 716,330
Cost of sales 551,409 510,446 482,428
Gross profit 283,501 262,397 233,902
Selling, general and administrative expenses 211,292 191,303 175,038
Amortization of intangibles 9,612 11,765 13,406
Income from operations 62,597 59,329 45,458
Interest expense, net 42,872 44,568 44,910
Income before income taxes 19,725 14,761 548
Income tax expense 9,697 6,635 4,646
Net income (loss) 10,028 8,126 (4,098 )
Other comprehensive income:
Foreign currency translation adjustment (1,548 ) 2,240 5,320
Comprehensive income $ 8,480 $ 10,366 $ 1,222

 

Easton-Bell Sports, Inc. markets and licenses products under such well-known brands as Easton, Bell, Giro, Riddell and Blackburn. Headquartered in Van Nuys, CA, the company has twenty-nine facilities worldwide.