Riddell Bell Holdings first quarter showed a 209.2% increase in sales due entirely to the acquisition late last year of Bell Sports. The company said that it will not attempt to give comparable results for the separated businesses, and combined results will not be available until Q4 2005. As a result, there is no transparency into the Bell Sports business last year. However, management did say that Team Sports sales during the first quarter were relatively flat while Individual Sports primarily Bell showed some benefit from increased motor-sports and bicycle accessory sales.
Perhaps the biggest announcement made by the company is its new restructuring initiatives. Bell Riddell is shutting down Riddells current headquarters and manufacturing facility in Chicago and moving its consumer products division to Bells facility in Illinois, while the institutional division will be moved to Riddells existing facility in Ohio. A total of 80 lay-offs are expected to result from this restructuring. The restructuring is expected to provide $2 million to $3 million in annual savings, primarily in cost of goods sold. The final cost of the restructuring will be $2 million to $3 million.
RBH management has laid out two primary goals for the company. The first is to define and capture existing opportunities that have resulted from combining these two companies. To this end, the company has primarily been focused on restructuring operations, but they have also looked at joint design opportunities, and will consider cross-selling. Riddell Bell is also looking at leveraging Bell athletes like Tony Hawk or Lance Armstrong through Riddells existing collectibles division.
Considering Riddell Bell Holdings is not a publicly traded company yet it is certainly drawing some interest from Wall Street analysts. There were more participants in the companys first quarter conference call than many companies who already have ticker symbols.
The company did not rule out acquisitions as a possible source for growth. President and CEO Bill Fry said that the company is not limited as far as acquisition size is concerned, its more about strategic fit. He also stated that the company has brands that are “core” in bicycling, snowsports, motor cycling, football, and auto racing. Any acquisition that could increase their presence in any of these areas would be of interest.
RBH may be looking for something to level out the seasonality of their business. Two of their largest volume businesses football and bicycling – are on the same buy-sell cycle with high working capital requirements in Q1 and Q2 and the majority of the cash coming in during Q3. To an extent, snowsports helmets and collectables offset this a bit, but the business is still seasonally unbalanced, using up to 75% of its revolving credit facility during peak working capital periods.
| Riddell Bell Holding, Inc. | |||
| Fiscal First Quarter Results | |||
| (in $ millions) | 2005 | 2004 | Change |
| Total Sales | $87.2 | $28.2 | +209% |
| Gross Margin | 35.8% | 42.2% | -120 bps |
| SG&A | 27.3% | 31.5% | -420 bps |
| Net Income | $0.17 | $0.31 | -45.1% |
| Inventory @ qtr-end | $57.5 | $49.6 | +15.8% |
| Acc Rec @ qtr-end | $86.8 | $66.4 | +30.7% |
