Easton-Bell Sports, Inc. reported sales slid 11.5% in its third quarter ended Oct. 3 to $180.4 million from $203.4 million a year ago. or a 10.5% decline on a constant currency basis. Revenues were down 19% in its Team Sports division and were off 1.8% in its Action Sports segment. Earnings were flat in the period.
Team Sports net sales decreased $21.4 million, or 19.0% for the third quarter of fiscal 2009, as compared to the third quarter of fiscal 2008, or an 18.1% decline on a constant currency basis. The decrease in net sales during the quarter was primarily due to the decline in sales of ice hockey equipment, football equipment and collectible football helmets. Football equipment sales were down as institutions reduced their purchases for the upcoming season and ice hockey net sales were down when compared to the previous year primarily due to the timing of product introductions.
Action Sports net sales decreased $1.6 million, or 1.8% for the third quarter of fiscal 2009, as compared to the third quarter of fiscal 2008, or a 1.1% decline on a constant currency basis. The decrease in net sales related primarily to lower sales of OEM cycling components, cycling accessories and powersports helmets, partially offset by increased sales of snow sports helmets and cycling gloves.
The company’s gross margin for the third quarter of fiscal 2009 was 34.4%, as compared to 35.8% for the third quarter of fiscal 2008. Margins throughout the year have been negatively impacted by unfavorable mix due to consumers trading down to lower price point products, the impact of changes in foreign currency exchange rates and higher close-out sales, partially offset by lower sourced product costs and lower warranty costs due to reduced defective product returns.
The company had net sales of $552.5 million for the first three fiscal quarters of 2009, a decrease of 8.9 % as compared to $606.3 million of net sales for the first three fiscal quarters of 2008, or a 7.0% decline on a constant currency basis.
The company’s net income for both the third quarters of fiscal 2009 and
2008 was $6.3 million. The company’s Adjusted EBITDA was $27.8 million
for the third quarter of fiscal 2009, a decrease of $3.3 million, or
10.7% as compared to $31.2 million of Adjusted EBITDA for the third
quarter of fiscal 2008.
“We experienced softness in sales and margin for certain segments of our business during the quarter, but at a slower rate as our new product introductions, sourcing initiatives and cost reductions began to positively impact results,” said Paul Harrington, president and chief executive officer. “In addition we were able to successfully manage our working capital, which allowed us to further reduce debt and improve our cash position during the quarter.”
Balance Sheet Items
Net debt totaled $362.6 million (total debt of $412.3 million less cash of $49.7 million) as of October 3, 2009, a decrease of $45.5 million over net debt amount at September 27, 2008. The decrease in net debt versus last year is due to a decrease in debt and capital lease obligations of $85.3 million, offset by a decrease in cash of $39.8 million. Working capital as of October 3, 2009 was $299.3 million, as compared to $313.9 million as of September 27, 2008. During the quarter, inventories decreased $11.8 million, or 8.3% and are down $18.7 million, or 12.7% for the year.
Easton-Bell Sports' brands include Easton, Bell, Giro, Riddell, and Blackburn. Headquartered in Van Nuys, California, the company has twenty-nine facilities worldwide.
