Easton-Bell Sports, Inc. had net sales of $216.3 million for the first quarter of 2012, an increase of 6.3 percent as compared to $203.4 million of net sales for the first quarter of 2011, gross margin increased by 230 bps to 33.8 percent from 31.5 percent, and Adjusted EBITDA increased by $2.9 million or 14.9 percent to $22.6 million.
“We are pleased with our sales and margin growth in the first quarter, driven by higher average selling prices associated with product innovation and productivity gains within our supply base,” said President and CEO Paul Harrington.
Team Sports net sales increased $8.1 million, or 7.0 percent for the first quarter ended March 31, as compared to the first quarter of 2011 driven by continued market share gains with Riddell football helmets and reconditioning services along with increased sales of Easton baseball and softball bats driven by the Power Brigade collection.
Action Sports net sales increased $4.8 million, or 5.5 percent for the first quarter of 2012, as compared to the first quarter of 2011 from increased sales of Giro and Bell cycling helmets to the specialty channel, Giro cycling shoes which were introduced in 2011 and increased sales of power sports helmets driven by new product launches.
The company’s gross margin for the first quarter of 2012 was 33.8 percent, as compared to 31.5 percent for the first quarter of 2011. The 230 bps of margin improvement related primarily to the sales growth in higher-margin Riddell football helmets, Easton baseball and softball bats and Giro and Bell cycling helmets and lower close-out sales.
Operating expenses increased $6.8 million or 13.4 percent during the first quarter of 2012 and were 26.4 percent of net sales, as compared to 24.8 percent of net sales for the first quarter of 2011. The first quarter of 2012 reflected increased spending on research and development and brand marketing initiatives, higher variable selling expenses associated with the sales growth, and increased depreciation expense.
The company’s Adjusted EBITDA was $22.6 million for the first quarter of 2012, an increase of $2.9 million or 14.9 percent as compared to the first quarter of 2011.
Easton-Bell ended the quarter with inventory of $144.9 million, down 2.2 percent from April 2, 2011.
Net debt at the end of the quarter was $382.3 million (total debt of $412.9 million less cash of $30.6 million), a decrease of $1.2 million compared to the net debt amount as of April 2, 2011. Working capital as of March 31, 2012 was $271.3 million as compared to $244.8 million as of April 2, 2011. The increase in working capital primarily resulted from the increase in accounts receivable related to sales growth and reduced accounts payable, partially offset by lower inventories.
The company had substantial borrowing capacity and liquidity as of March 31, 2012, with $177.9 million of additional borrowing availability under the revolving credit facility and liquidity of $208.5 million when including $30.6 million of cash.
