Business news : Bauer's Q1 Revenues Rise 4 Percent, Futures Strong

Kevin Davis CEO Bauer

Bauer Performance Sports Ltd. reported a modest increase in earnings, held back by higher costs on a seasonal basis of some recently acquired companies. Revenues improved 3.8 percent, led by gains in apparel, lacrosse, and roller hockey as well as several ice hockey equipment categories. Bookings for its 2013 "Holiday" season (October 2013 - March 2014), are up 9 percent on a currency-neutral basis.

announced its interim financial results for the first quarter of fiscal 2014 ended August 31, 2013. All figures are in U.S. dollars.

US$ 000,000's except per share data and %		Three months ended
		Aug 31, 2013		Aug 31, 2012		Change vs. prior period
Revenues		$154.0		$148.3		4	%
Gross profit		59.7		60.3		-1	%
Adjusted Gross Profit*		61.5		61.0		1	%
Adjusted EBITDA*		36.9		37.9		-3	%
Net income (loss)		21.3		16.0		33	%
Adjusted Net Income*		23.1		22.9		1	%
Earnings (Loss) per share (diluted)		$0.57		$0.45		27	%
Adjusted EPS*		$0.63		$0.65		-3	%

*Note: Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income/Loss and Adjusted EPS are non-IFRS measures. For the relevant definitions and reconciliations to reported results, please see "Non-IFRS Measures" at the end of this news release and in the Company's Management's Discussion and Analysis ("MD&A") for the most recent period.

Bauer's overall revenues increased by 4 percent in the first quarter of fiscal 2014. This increase was fueled primarily by strong performance in apparel, lacrosse, and roller hockey as well as several ice hockey equipment categories. Apparel revenues increased by 57 percent driven by strong growth in off-ice team apparel, base layer performance apparel, lifestyle apparel, and the addition of hockey and soccer uniform sales. Lacrosse sales increased 43 percent driven by strong demand for the new CASCADE "R" helmet, growth in our MAVERIK equipment line, and an additional month of Cascade sales compared to the first quarter of fiscal 2013. Roller hockey sales grew 47 percent driven by strong skate sales. Ice hockey equipment sales grew in key categories such as sticks, protective equipment, and replacement steel blades; however, this was offset by the fact that the prior year included the initial launch of Bauer's third family of ice hockey equipment, NEXUS, resulting in a 2 percent decline in ice hockey equipment sales versus the prior year. High levels of retail inventory in the hockey marketplace also contributed to the lower ice hockey equipment revenues in the quarter.

Overall revenues from the North American market grew by 3 percent in the first quarter of fiscal 2014, while sales outside North America grew by 7 percent.

In addition to Bauer's strong first quarter results, the company also announced that it has obtained $70.1 million of booking orders for its 2013 "Holiday" season (October 2013 - March 2014), an increase of 9 percent on a currency neutral basis (7 percent including the impact of foreign currency) over the 2012 "Holiday" season, reflecting the continuing enthusiasm for Bauer's innovative products.

"Our diversified platform, and our dedication to delivering innovative, high quality, performance enhancing products continues to drive growth," said Kevin Davis, President and Chief Executive Officer of Bauer. "Customer demand for our products remains very strong, and we continue to take share in this challenging marketplace. We are extremely pleased with the increase in booking orders and expect that 2014 will be another record year for our top and bottom line performance as the headwinds which have been impacting our revenues are beginning to dissipate."

Adjusted Gross Profit in the first quarter of fiscal 2014 increased slightly to $61.5 million. Adjusted Gross Profit as a percentage of revenues decreased to 39.9 percent, compared to 41.1 percent in the comparative period of fiscal 2013, primarily due to growth in uniforms which have lower gross profit margins compared to our other equipment and apparel categories.

Excluding the impact of one-time acquisition related charges and share-based compensation expense, SG&A as a percentage of revenues increased to 15.1 percent from 14.2 percent in the comparative quarter last year. This increase was driven primarily by the effect of adding the SG&A from recently acquired companies in a seasonally low revenue quarter for these same companies. Adjusted Net Income grew to $23.1 million and Adjusted EPS was $0.63 per share. The increase in average shares outstanding in the first quarter of fiscal 2014 relative to the first quarter of fiscal 2013 due to the issuance of shares to finance the Cascade acquisition reduced our Q1 Adjusted EPS by three cents per share.

On a trailing twelve-month basis, revenues were $405.2 million, Adjusted Gross Profit reached $153.5 million or 37.9 percent of revenues, Adjusted EBITDA was $61.3 million, and Adjusted EPS was $0.98.

The Company continued to manage its balance sheet and generate strong cash flow as its leverage ratio, defined as net indebtedness divided by EBITDA, reduced to 2.70 compared to 2.78 as of August 31, 2012. As of August 31, 2013 Bauer had working capital of $267.7 million compared to working capital of $250.4 million as of August 31, 2012. This year-over-year increase was due primarily to higher inventories and receivables related to the acquisifations of Inaria International, Inc. and Combat Sports.

SELECTED HIGHLIGHTS

    Combat Sports became the exclusive provider of bats for the NCAA Division I Washington State University ("WSU") baseball program for three years, beginning with the upcoming 2014 season. WSU plays in the competitive Pacific-12 Conference (PAC-12), and has made 16 appearances in the NCAA regional tournament and reached the College World Series four times. The team has produced 23 Major League Baseball draft picks in the last five years.

    Bauer and Hockey Canada announced the next phase of their Grow the Game partnership, including initial research study results as well as the creation of pilot programs developed to specifically address the results of those findings.

By press release