Easton-Bell Sports said new products helped it grow sales and margins in the third quarter ended Oct. 1. Team sports sales rose 13 percent on the strength of football helmets, while an overhang of ski helmets in Europe limited sales growth in the Action Sports segment to 0.5 percent.

 
The company reported net sales of $212.5 million for the third quarter ended Oct. 1, an increase of 6.9 percent as compared to $198.8 million of net sales for the third quarter of fiscal 2010. Net income increased by $1.7 million, or 56.5 percent during the quarter. The increase in net income resulted from the sales growth and a 60 basis points margin improvement, with net income also benefiting from reduced interest and income tax expenses.
“We are pleased with our sales and margin growth driven by our new product launches, which allowed us to continue to invest in our brands while also increasing our profitability in the quarter,” said Paul Harrington, President and Chief Executive Officer.
Team Sports net sales increased $14.2 million or 13.9 percent in the third quarter of fiscal 2011, as compared to the third quarter of fiscal 2010, or 13.0 percent on a constant currency basis. The sales growth resulted from successful new product launches of Easton baseball and softball bats and ice hockey sticks during the quarter and continued market share gains in Riddell football helmets and apparel.
Action Sports net sales decreased $500,000 or 0.5 percent for the third quarter of fiscal 2011, as compared to the third quarter of fiscal 2010, or 1.0 percent on a constant currency basis. The decrease reflects the negative impact on snow helmet sales from the overall softness in the European market due to high retail inventory levels from last season, mostly offset by double-digit increases in sales of Easton branded wheels and components and strong demand for the recently introduced line of Giro cycling shoes.
The company's gross margin for the third quarter of fiscal 2011 was 35.6 percent, as compared to 35.0 percent for the third quarter of fiscal 2010. The margin gain was driven by a strong sales mix of football helmets and increased sales of higher margin cycling helmets, which was dampened by reduced sales of snow helmets in Europe and close-out sales of ice hockey equipment.
The company's operating expenses increased $5.3 million or 10.8 percent and 90 bps as a percentage of net sales during the third quarter of fiscal 2011, as compared to the third quarter of fiscal 2010. The increase related to variable costs to support the sales growth and planned investments.
The company's Adjusted EBITDA was $28.8 million for the third quarter of fiscal 2011, an increase of $800,000 or 2.9 percent as compared to the third quarter of fiscal 2010.
Balance Sheet Items
Net debt totaled $359.0 million (total debt of $382.6 million less cash of $23.6 million) as of Oct. 1, an increase of $3.5 million compared to net debt of $355.5 million as of Oct. 2, 2010. The increase in net debt relates to increased working capital requirements to support the sales growth. Working capital as of October 1, 2011 was $255.8 million as compared to $234.5 million as of October 2, 2010.
The company had substantial borrowing capability as of Oct. 1, 2011, with $174.7 million of additional borrowing ability under the revolving credit facility and liquidity of $198.3 million when including the $23.6 million of cash.
Easton-Bell Sports, Inc. is a leading designer, developer and marketer of branded sports equipment, protective products and related accessories. The Company markets and licenses products under such well-known brands as Easton, Bell, Giro, Riddell and Blackburn. The Company's products incorporate leading technology and designs and are used by professional athletes and enthusiasts alike. Headquartered in Van Nuys, California, the Company has thirty facilities worldwide.