Jarden Outdoor Fourth Quarter Profits Soar on Double-Digit Sales Growth

 

Net sales for the Outdoor Segment reached $604.0 million during the quarter, up 16.8% from the fourth quarter of 2009. Organic growth was 13% for the period, (excluding a $7 million foreign currency exchange impact), led by winter sports brands K2, Marker, and Volkl due primarily to new product introductions, strong retail listings, and improved market conditions including good early snow conditions.

 

During a conference call with analysts, JAH management said ell-through was strong, also pointing to strong sales for next winter. Jarden also owns the Abu Garcia, Coleman, Penn, Rawlings, Stearns, Zoot and other outdoor and team sporting goods brands. Aero, a maker of inflatable mattresses acquired by The Coleman Company in October, contributed approximately $28 million in sales in the quarter.

Executives said the strong sales growth reflects increased confidence and spending among employed consumers more than any big gains in market share.

“We view winter sports sales as a good barometer for consumer confidence as mid-range skis retail from around $500 and performance there was exceptionally strong, producing both record sales and EBITDA,” said company President and COO Jim Lillie. “In technical apparel, Marmot continued to execute against its aggressive growth strategy outlined to investors last year, growing approximately 30% in the quarter and over 15% for the year.”

Outdoor division segment operating earnings grew nearly seven fold to $22.4 million as reorganization and other integration costs dropped off to $7.4 million from $29.2 million in the fourth quarter of 2009.
For the full year ended Dec. 31, Jarden Outdoor Solutions sales rose 8.9% to $2.52 billion, while operating earnings rose 41.5% to $228.6 million, again because of a sharp fall off in acquisition-related one-time charges. Operating earnings reached 9.1% of net sales in 2010, compared to 7.0% a year earlier, a big step toward the company-wide goal of 15% margins by 2014.   A record number of eligible employees, or 90%, will receive bonuses based on the company’s 2010 performance, said company CFO Ian Ashken. 

Management said the company appears to be on track to expand gross margins by 50-60 basis points as declines in ocean container rates and price increases by Jarden offset rising commodity prices and the company passes through price increases.  They expect companywide organic growth to fall in their 3 to 5 percent target range.

 “The winter sports season remains strong and we're in a low- to no-inventory position in winter sports heading into the U.S. and international trade show, which bodes well for the 2011-2012 season,” Lillie said. “The bookings for Jarden team sports including our Rawlings and Worth baseball and softball brands and our Gate and deBeer lacrosse brands look strong so far. “

Jarden Chairman and CEO Martin Franklin said the company is in no hurry to acquire companies and will instead focus on using its projected $1 billion in free cash flow over the next 3 to 4 years to pay down debt. 

The company ended the year with a total debt-to-equity ratio of 2.89, nearly five times the average for the Yahoo Sporting Goods index.
“We don't need to buy anything to execute our plan, so we have the luxury of not feeling any pressures to make acquisitions, said Franklin.