Business news :Bauer's Q2 Revenues Climb 9.3 Percent

Bauer Performance Sports Ltd. reported revenues climbed 9.3 percent in its second quarter ended Nov. 30, to $109.6 million. Adjusted net income improved 65.9 percent to $7.3 million from $4.4 million.

Six Month Results
Revenues grew by 6 percent (9 percent excluding the impact of foreign exchange) to $257.9 million in the first half of Fiscal 2013 led by strong performance in several ice hockey equipment categories driven by recent new product launches. The new BAUER RE-AKT helmet helped drive 16 percent growth in helmets, while the success of the new BAUER NEXUS product line helped drive 11 percent growth in under-protective category revenues. Partially offsetting these gains was a 7 percent decline in goalie revenues due to the earlier launch of the new goalie product line in the 2012 Back-to-Hockey season as compared to the prior year. Lacrosse revenues increased significantly driven by the addition of sales from the recently acquired Cascade Helmets Holdings, Inc. ("Cascade") and apparel revenues grew by 27 percent driven by BAUER's new line of performance apparel and bags. Overall revenues from the North American market grew by 6 percent in the six month period ended November 30, 2012 compared to the same period last year, while sales outside North America grew by 8 percent in the same period. Second quarter revenues grew by 9 percent (10 percent excluding the impact of foreign exchange) due to the addition of Cascade and Inaria International, Inc. ("Inaria") revenues and continued growth in ice hockey equipment and related apparel categories, partially offset by lower sales to NHL teams as a result of the NHL lockout. Notably, apparel revenues were up 50 percent in the quarter (43 percent excluding the impact of Inaria). Revenues from the North American market were up 11 percent while sales outside of North America were up 5 percent in the second quarter.

Adjusted Gross Profit in the six month period ended November 30, 2012 increased by $6.3 million, or 7 percent, to $100.7 million. Adjusted Gross Profit as a percentage of revenues increased slightly to 39.0 percent for the six month period ended November 30, 2012 compared to 38.9 percent in the six month period ended November 30, 2011. During the second quarter of Fiscal 2013, Adjusted Gross Profit increased by $5.5 million, or 16 percent, to $39.7 million and Adjusted Gross Profit as a percentage of revenues increased to 36.2 percent from 34.1 percent. The increase in Adjusted Gross Profit as a percentage of revenues for the quarter and first half of Fiscal 2013 was driven by higher margins on ice hockey equipment, the impact of the Cascade acquisition and favourable other cost of goods sold, partially offset by the impact of higher product costs and unfavourable foreign exchange.

Year-to-date Adjusted Net Income increased by $4.9 million, or 19 percent, to $30.2 million and second quarter Adjusted Net Income increased by $2.9 million, or 64 percent, to $7.3 million. The increase in Adjusted Net Income was driven by the increase in Adjusted Gross Profit, continued benefits of operating leverage in selling, general and administrative expenses, and a favourable impact from the Company's hedging activities.

Adjusted EPS increased 5 percent, or $0.04, to $0.84 for the six months ended November 30, 2012 compared to the same period last year and second quarter Adjusted EPS increased 43 percent, or $0.06, to $0.20. Fiscal 2013 Adjusted EPS includes an unfavourable impact from the higher number of common shares outstanding as a result of the share offering in June to fund the Cascade Acquisition making our Q1 and YTD Fiscal 2013 Adjusted EPS figures not directly comparable to the prior year. Excluding the impact of the Cascade Acquisition, YTD Adjusted EPS would have been approximately $0.88 or a 10 percent increase over the prior year. For the full fiscal year the Company currently expects the Cascade acquisition to be accretive to Adjusted EPS, however due to the seasonality of Cascade's business - a significant amount of Cascade's income is generated during the second and third fiscal quarters of the BAUER's fiscal year - the income from Cascade in the first fiscal half does not yet offset the dilutive impact of the higher number of common shares outstanding.

"BAUER continues to deliver strong results in hockey, lacrosse and our related apparel businesses," said Kevin Davis, President and Chief Executive Officer, Bauer Performance Sports. "Our newly launched hockey equipment products and our further investment into both apparel and lacrosse are key ingredients to our current and future success. We expect that these investments, combined with our comprehensive marketing strategy and recently launched brand building initiatives, will continue to fuel our exceptional performance. Like the millions of hockey fans around the world, we are excited that the National Hockey League is returning to action. Bauer Hockey maintains an important and valuable relationship with both the NHL and its players, and the recent agreement is welcome news for everyone involved."

The Company continued to deleverage as its leverage ratio, defined as net indebtedness divided by EBITDA, was 2.69 as of November 30, 2012 compared to 2.73 as of November 30, 2011. As of November 30, 2012, BAUER had working capital of $215.1 million compared to working capital of $179.6 million as of November 30, 2011, an increase of 20 percent. This increase was driven by the acquisitions of Cascade and Inaria, and sales growth of 18 percent, 4 percent, and 9 percent in the three most recent quarters (which include the entire "Back to Hockey" 2012 booking season).

Other Recent Highlights

• During the week of October 1, 2012 the Company held its annual BAUER World event, where leading retailers from around the world were able to see and experience the newest BAUER gear, including BAUER's latest VAPOR line of skates, new team apparel and a new line of goalie equipment. In addition to unveiling new products, the Company also launched several key corporate initiatives including:
• An objective to grow hockey participation by 1 million new players by 2022 through a unique multi-year program. Partnering with Hockey Canada, USA Hockey, and led by a cross-functional team, including Mark Messier, who joined forces with BAUER as a result of the Company's recent acquisition of Cascade, the initiative will take a leadership role in both growing participation and increasing player safety.
• The unveiling of the "OWN THE MOMENT" brand campaign, a fully integrated global initiative that focuses on the numerous moments in hockey that make the sport truly unique and special. The campaign is the first BAUER brand campaign in more than 15 years.
• On October 16, 2012 BAUER closed the acquisition of substantially all of the assets of Inaria, a global provider of team sports and active apparel for Cdn$7 million in cash. The acquisition marks the Company's entrance into the growing jersey market and provides BAUER with full team apparel capabilities, including the design, development and manufacturing of uniforms for ice hockey, roller hockey, lacrosse, soccer and other team sports, enabling the Company to become a "one-stop-shop" for its global retail partners' equipment and team apparel needs, for both ice hockey and lacrosse.
• On October 17, 2012 funds managed by Kohlberg Management VI, LLC (the "Kohlberg Funds"), BAUER's largest shareholder, completed the sale of an aggregate of 4,140,000 common shares of the Company (the "Offering") at a price of Cdn$9.90 per share. A syndicate of underwriters completed the Offering on a bought deal basis. BAUER did not receive any proceeds from the Offering. Immediately following closing, the Kohlberg Funds owned the equivalent of 41.0 percent of the issued and outstanding common shares on a non-diluted basis (approximately 33.8 percent on a fully diluted basis). 

( SportsOneSource Media )