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Bauer Performance Sports Announces Third Quarter Results

TORONTO, ONTARIO--(Marketwired - Apr 10, 2013) - Bauer Performance Sports Ltd. (BAU.TO) ("BAUER" or the "Company") today announced its unaudited financial results for the third quarter and nine months of Fiscal 2013 ended February 28, 2013 (all figures are in U.S. dollars).

US$ 000,000's except per share data and % Three months ended Nine months ended
February 28, 2013 February 29, 2012 Change vs. prior period February 28, 2013 February 29, 2012 Change vs. prior period
Revenues $54.9 $51.5 7% $312.9 $294.2 6%
Gross profit 14.7 14.9 -2% 113.4 108.0 5%
Adjusted Gross Profit* 16.4 15.5 6% 117.1 109.9 7%
Adjusted EBITDA* (3.8 ) (3.8 ) - 48.3 40.4 20%
Net income (loss) (2.9 ) (7.5 ) 61% 19.2 23.4 -23%
Adjusted Net Income (Loss)* (4.2 ) (4.4 ) 5% 26.0 20.8 25%
Earnings (Loss) per share (diluted) $(0.08 ) $(0.25 ) 68% $0.56 $0.74 -24%
Adjusted EPS * $(0.11 ) $(0.14 ) 21% $0.72 $0.66 9%

*Note: Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income 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 third quarter of Fiscal 2013.

The 6% increase in overall revenues in the nine months of Fiscal 2013 was led by strong performance in several ice hockey equipment categories, and solid performance in both the Company's lacrosse and apparel product categories. Performance in the lacrosse category has been positively impacted by the Cascade Helmets ("Cascade") acquisition and the apparel category has seen growth in every category, including team apparel, which has benefitted from both organic growth and the acquisition of Inaria International ("Inaria").

Third quarter revenues grew by 7% due to strong growth in apparel across all apparel categories, with lifestyle (+51%), performance (+56%), and team apparel (+14% organic, +53% including Inaria) all showing strong increases, and the addition of Cascade revenues, partially offset by lower ice hockey equipment revenue. The Company's third fiscal quarter falls between the major shipping months of its two selling seasons, "Back-to-Hockey" and "Holiday" and as such relies heavily on repeat orders to fill in retailer needs. Ice hockey equipment sales in the quarter were slightly lower than the prior year due to lower sales of closeout inventories, a slight decline in goalie sales resulting from a shift in the timing of product launches as compared to the prior year, and excess competitor inventory in the market that reduced retailer open to buy for repeat orders.

Adjusted Gross Profit in the nine-month period ended February 28, 2013 increased by $7.2 million, or 6.6% to $117.1 million. In the three and nine month periods in Fiscal 2013, Adjusted Gross Profit as a percentage of revenues was consistent with the levels reported in the comparable periods in Fiscal 2012.

BAUER continues to demonstrate operating leverage in SG&A. Excluding expenses associated with the integration of acquisitions and secondary share offerings, SG&A as a percentage of revenues has declined 30 basis points in both the three and nine month periods ending February 28, 2013.

Adjusted Net Income grew by 25% in the nine-month period of Fiscal 2013 to $26.0 million and Adjusted EPS increased 9%, to $0.72, compared to the same period last year. In the third quarter, Adjusted Net Loss improved by 5% to $4.2 million and Adjusted EPS improved 21%, to a loss of $0.11 per share.

BAUER also announced that booking orders for its 2013 Back-to-Hockey season increased by 2% over the 2012 Back-to-Hockey season to $188.7 million. The increase is notable as this year's Back-to-Hockey bookings include only the launch of VAPOR family of products, whereas two families of products (NEXUS and SUPREME) were launched at the same time in 2012. See "Booking Orders" further below.

"We continue to demonstrate the strength of our platform and derive benefits from our recent lacrosse and apparel acquisitions as our revenue and profits strengthened in the traditionally challenging third quarter. We are extremely pleased with our continued growth driven by our geographic and product diversification," said Kevin Davis, President and Chief Executive Officer, Bauer Performance Sports. "Our growth in hockey booking orders from only one product family in the upcoming Back-to-Hockey season versus the two families a year ago is remarkable as is the immediate acceptance of our team apparel initiative following our Inaria acquisition," added Davis.

On a trailing twelve-month basis, revenues were $393.3 million, Adjusted Gross Profit reached $152.3 million or 38.7% of revenues, Adjusted EBITDA was $57.8 million, and Adjusted EPS was $0.87.

The Company continued to deleverage as its leverage ratio, defined as net indebtedness divided by EBITDA, was 2.76 as of February 28, 2013 compared to 2.85 as of February 29, 2012. As of February 28, 2013, BAUER had working capital of $160.1 million compared to working capital of $136.4 million as of February 29, 2012, an increase of 17%. This increase was driven by the acquisitions of Cascade and Inaria, the impact of foreign exchange, and our year-to-date revenue growth.

Recent Events/Highlights

  • In March 2013, BAUER announced that it has become the new official uniform, equipment and apparel provider for the British Columbia Hockey League (BCHL), one of the top junior organizations in North America. This exclusive three-year partnership starting with the 2013-14 season will include uniforms, equipment and apparel for the BCHL's approximately 360 players, and is a significant step forward for BAUER's new but growing team apparel program. The Company is now a one-stop shop for associations, teams and leagues at any level around the world, with the ability to provide uniforms as well as high performance equipment.
  • On March 21, 2013, the Canadian government announced that it will reduce import tariffs on certain hockey equipment effective as of April 1, 2013. Prior to April 1, 2013, the Company's tariffs on hockey equipment imported into Canada were up to 18% and were included in the Company's cost of goods sold. BAUER is currently assessing the impact of this change and it is the Company's expectation that in due course the lower tariffs will result in lower pricing to its customers on affected products but will have limited impact on profitability, as the reduction in the costs of goods sold will be passed on to retailers.

Adjusted Gross Profit, EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are non-IFRS measures. For the relevant definitions and reconciliations to reported results, please see "Non-IFRS Measures" noted below and the Company's MD&A for the third quarter of Fiscal 2013.

The Company's unaudited Condensed Consolidated Interim Financial Statements and MD&A for the period ended February 28, 2013 have been filed with applicable regulatory authorities and are available on SEDAR at www.sedar.com and on the Company's website.


Management will hold a conference call and live audio webcast on Thursday, April 11, 2013 at 10:00 a.m. (ET) to discuss the Company's third quarter results. The call will be hosted by Kevin Davis, President and CEO and Amir Rosenthal, Chief Financial Officer. Following management's presentation, there will be a question and answer session for analysts.

To access the call, please dial 1-888-312-3048 or 1-719-785-1765. The conference call will also be accessible via webcast at www.bauerperformancesports.com.

A replay of the conference call will be available from 1:00 p.m. ET on April 11, 2013, until midnight ET, April 25, 2013. To access the replay, dial 1-877-870-5176 or 1-858-384-5517, followed by passcode 9271464.

To participate in the live audio webcast, please visit the Company's website at www.bauerperformancesports.com. The webcast will also be archived on the Company's website.


Bauer Performance Sports Ltd. (BAU.TO) is a leading developer and manufacturer of ice hockey, roller hockey, and lacrosse equipment as well as related apparel. The Company has the most recognized and strongest brand in the ice hockey equipment industry, and holds the top market share position in both ice and roller hockey. Its products are marketed under the BAUER, MISSION, MAVERIK, CASCADE and INARIA brand names and are distributed by sales representatives and independent distributors throughout the world. The Company is focused on building its leadership position and growing market share in all product categories through continued innovation at every level. For more information, visit www.bauerperformancesports.com.


BAUER's revenues are comprised of booking, repeat and other orders. Although ice hockey booking orders provide the Company some visibility into its future revenues for the season, there may not be a direct relationship between the change in booking orders year over year and the anticipated total revenues change for that season, due to several factors including, among others, the potential impact booking orders have on the amount and timing of future repeat orders for which the Company has little visibility and the increased diversification of the Company's product offerings. For a more detailed discussion and definition of BAUER's booking and repeat orders, please see the Outlook section of the Company's third quarter MD&A, which is available on SEDAR at www.sedar.com.


Adjusted Gross Profit, EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS are non-IFRS measures. Adjusted Gross Profit is defined as gross profit plus the following expenses which are part of cost of goods sold: (i) amortization and depreciation of intangible assets, (ii) non-cash charges to cost of goods sold resulting from fair market value adjustments to inventory as a result of business acquisitions, and (iii) reserves established to dispose of obsolete inventory acquired from acquisitions. Adjusted EBITDA is defined as EBITDA (net income adjusted for income tax expense, depreciation and amortization, losses related to amendments to the Company's credit facility, gain or loss on disposal of fixed assets, net interest expense, deferred financing fees, unrealized gains/losses on derivative instruments, and realized and unrealized gains/losses related to foreign exchange revaluation) before restructuring and other one-time or non-cash charges associated with acquisitions, pre-IPO sponsor fees, costs related to share offerings, as well as share-based payment expense. Adjusted Net Income is defined as net income adjusted for unrealized gains/losses related to derivative instruments and unrealized gains/losses related to foreign exchange revaluation, one-time or non-cash charges associated with acquisitions, amortization of acquisition related intangible assets for acquisitions since the Company's initial public offering, costs related to share offerings, share-based compensation expense, and other non-cash or one-time items. Adjusted EPS is defined as Adjusted Net Income/Loss divided by the weighted average diluted shares outstanding.

Reconciliations of these non-IFRS measures to the relevant reported results can be found in the Company's MD&A for the third quarter of Fiscal 2013.


This press release includes forward-looking statements within the meaning of applicable securities laws. Forward-looking statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "predicts", "likely" or "potential" or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward looking statements.

Forward-looking statements, by their nature, are based on assumptions, including those described herein and are subject to important risks and uncertainties. Many factors could cause our actual results to differ materially from those expressed or implied by the forward looking statements, including, without limitation, the following factors: inability to introduce new and innovative products, intense competition in the equipment and apparel industries, inability to introduce technical innovation, inability to protect worldwide intellectual property rights, inability to successfully integrate recent acquisitions, decrease in ice hockey, roller hockey and/or lacrosse participation rates, adverse publicity, reduction in popularity of the NHL and other professional leagues of sports in which our products are used, inability to maintain and enhance brands, reliance on third party suppliers and manufacturers, disruption of distribution chain or loss of significant customers or suppliers, cost of raw materials and shipping freight and other cost pressures, a change in the mix or timing of orders placed by customers, inability to forecast demand for products, inventory shrinkage or excess inventory, product liability claims and product recalls, compliance with standards of testing and athletic governing bodies, departure of senior executives or other key personnel, litigation, employment or union related matters, inability to translate order bookings into realized sales, fluctuations in the value of certain foreign currencies in relation to the U.S. dollar, inability to manage foreign exchange derivative instruments, general economic and market conditions, changes in consumer preferences and the difficulty in anticipating or forecasting those changes, natural disasters, as well as the factors identified in the "Risk Factors" section of BAUER's Annual Information Form dated August 29, 2012 available on SEDAR at www.sedar.com.

Furthermore, unless otherwise stated, the forward looking statements contained in this press release are made as of the date of this news release, and we have no intention and undertake no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as required by law.