Easton Bell Q1 Action Sports Revenue Increases

Easton Bell, parent company to Giro and Bell, reported  first quarter net sales for its action sports division increased more than 16% to $12.4 million, mainly due to a jump in sales of cycling helmets and accessories, as well as powersports helmet sales to specialty dealers and Giro branded cycling shoes. The Van Nuys, California-based company released the following summary of its first quarter performance:

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Results for the First Quarter ended April 2, 2011

The Company had net sales of $203.4 million for the first quarter of fiscal 2011, an increase of 4.8% as compared to $194.1 million of net sales for the first quarter of fiscal 2010. Operating income was $11.0 million for the first quarter of fiscal 2011, an increase of $0.9 million, or 8.6% when compared to the first quarter of fiscal 2010 normalized for $1.6 million of increased compensation expense in 2011.

"We are pleased to report our 5th consecutive quarter of sales growth driven by a strong start to the bike season within Action Sports, including the launch of our new Giro cycling shoes," said Paul Harrington, President and Chief Executive Officer. "The shifting of Team Sports' new product launches to better fit retailers' and consumers' buying patterns will generate sales and margin improvement in the back half of 2011."

Action Sports net sales increased $12.4 million, or 16.6% for the first quarter of fiscal 2011, as compared to the first quarter of fiscal 2010, or a 15.8% increase on a constant currency basis. The increase was due to higher sales of cycling helmets and accessories, higher sales of Bell powersports helmets to specialty dealers, growth in Easton branded cycling wheels and components and the introduction of Giro branded cycling shoes.

Team Sports net sales decreased $3.1 million or 2.6% in the first quarter of fiscal 2011, as compared to the first quarter of fiscal 2010, or a 3.1% decrease on a constant currency basis. The decrease was due to baseball product launches shifting to the back half of this year versus the first half last year, reduced demand for hockey sticks at retail, partially offset by growth in baseball, softball and hockey protective equipment and hockey skates.

The Company's gross margin for the first quarter of fiscal 2011 was 31.4%, as compared to 33.4% for the first quarter of fiscal 2010. The margin decline related primarily to escalating fuel costs, shifting sales of higher-margin baseball bats versus a year ago and sales growth in youth football helmets, partially offset by lower inventory write-offs and close-out sales in Action Sports and favorable foreign currency exchange rates.

The Company's operating expenses decreased $0.9 million or 1.7% and 160 bps as a percentage of net sales during the first quarter of fiscal 2011, as compared to the first quarter of fiscal 2010 when normalized for $1.6 million of increased compensation expense and while funding variable costs to support the sales growth in 2011.

The Company's Adjusted EBITDA was $19.7 million for the first quarter of fiscal 2011, an increase of $0.4 million or 2.3% as compared to the first quarter of fiscal 2010 when normalized.

A detailed reconciliation of Adjusted EBITDA to net income, which the Company considers to be the most closely comparable GAAP financial measure, is included in the section entitled "Reconciliation of Non-GAAP Financial Measures," which appears at the end of this press release.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited and amounts in thousands)

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited and amounts in thousands)

Fiscal Quarter Ended

April 2,
2011

April 3,
2010

Net sales $ 203,398 $ 194,104
Cost of sales 139,441 129,342
Gross profit 63,957 64,762
Selling, general and administrative expenses 50,367 49,711
Amortization of intangibles 2,553 3,335
Income from operations 11,037 11,716
Interest expense, net 10,993 11,512
Income before income taxes 44 204
Income tax expense 106 82
Net (loss) income (62 ) 122
Other comprehensive income:
Foreign currency translation adjustment 954 1,278
Comprehensive income $ 892 $ 1,400

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited and amounts in thousands)