Sport Supply Group reported that sales increased 4.4% for its second fiscal quarter ended December 31, 2009 to $55.5 million from $53.1 million in the same year-ago period. Margins also increased 90 basis points to a 36.1% level, up from 35.2% a year ago.
The company experienced increases in both operating profit and diluted EPS, as operating profit rose 26.3% to $1.8 million, up from $1.4 million a year go, while diluted EPS rose 75% from 4 cents to 7 cents. Net income decreased for the quarter by 12.4% to $0.9 million from $1.1 million in the same year-ago period.
Speaking on the results of the quarter, Chairman and CEO Adam Blumenfeld said, We are pleased to report solid results in the second fiscal quarter. It was another strong performance, led by 10.5% top line growth from our Road Sales Group, which was slightly offset by a 1.8% decrease in our Catalog Group; gross margin expansion across the operating platform, and a continued focus on managing working capital and preserving cash. Importantly, in light of the broader market uncertainties, Sport Supply Group continues to demonstrate its ability to grow market share and profitability. We attribute this success to the commitment and efforts of the entire SSG team and our best-of-breed direct distribution model.
“We are particularly proud of our ability to produce these positive operating results while, at the same time, strengthening our financial position. On December 1, 2009, we re-paid all outstanding 5.75% convertible debentures. As of December 31, 2009, we had net debt of $4.9 million. This significant reduction in debt can be attributed to higher sales, well-managed inventories and faster cash collections. Over the last three years, the Company has reduced net debt by more than $80.0 million largely through operating cash flows, which we view as a phenomenal achievement.
Blumenfeld concluded, “While we acknowledge the ongoing economic headwinds facing the marketplace, we continue to believe Sport Supply Group is best positioned to weather any short-term volatility as well as capitalize on longer term emerging opportunities.”
SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||||
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| | Three Months Ended | | Six Months Ended | ||||||||||||
| | December 31, | | December 31, | ||||||||||||
| | | 2009 | | | | 2008 | | | | 2009 | | | | 2008 | |
| | | | | | | | | ||||||||
Net sales | | $ | 55,529 | | | $ | 53,175 | | | $ | 132,999 | | | $ | 126,752 | |
Cost of sales | | | 35,499 | | | | 34,443 | | | | 85,065 | | | | 81,101 | |
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