Collegiate Pacific (AMEX:BOO)
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Collegiate Pacific Inc. (AMEX:BOO):
Q107 Operating Margins of 10.7% -- up 26%
Company Re-Affirms FY07 EPS Guidance of $0.52 - $0.64
SSPY Transaction Completed -- Synergy Work Begins
A conference call will be held today, November 13, 2006 at 3:30PM CST /
4:30PM EST and may be accessed by dialing 800-706-7748 and using
passcode 80281036. A replay of today’s call
will be available for 7 days and may be accessed by dialing 888-286-8010
and using passcode 93868069.
Collegiate Pacific Inc. (AMEX:BOO) today announced results for its first
fiscal quarter ended September 30, 2006, and also announced the
successful completion of its acquisition earlier today of the remaining
shares of SSPY that it did not already own for a purchase price of
approximately $24.0 million in cash. Under the terms of the September
21, 2006, definitive merger agreement, SSPY stockholders will receive
$8.80 in cash for each share of SSPY common stock. The company financed
the merger through borrowings under its new credit facility with Merrill
Lynch Business Financial Services, Inc.
In connection with closure of the SSPY transaction, the company also
announced the previously contemplated executive management changes took
effect today. This includes the resignation of Michael J. Blumenfeld as
Chief Executive Officer. Mr. Blumenfeld remains as Chairman of the
Board. Adam L. Blumenfeld, the former President of the company, has been
named Chief Executive Officer. Terrence M. Babilla was appointed
President of the company. Mr. Babilla was formerly the President and
Chief Operating Officer of SSPY.
Commenting on the first quarter, Adam Blumenfeld, Chief Executive
Officer, stated: “We are pleased this quarter
met internal expectations with respect to earnings per share and
exceeded internal expectations with respect to gross profit margin
percentages, selling, general and administrative expenses and operating
profits. The quarter was testament, in our view, to a heightened focus
placed on delivery of income. Earnings per share set a Company record at
$0.28 per fully diluted GAAP share -- approximately 27% higher than the
year ago results of $0.22 per GAAP share. Gross profit margins for the
quarter were 35.3%, which was slightly better than plan, and 265 basis
points higher than last year due to better selling discipline and
pricing power. Selling, general and administrative expenses were more
than $1.0 million under plan for the quarter and can be attributed to an
increased focus on cost controls across the platform. Operating margin
was 10.7% -- slightly ahead of plan and 26% better than the year ago
period. Net sales of approximately $68 million for the quarter were
approximately 4.4% better than last year, but fell short of our internal
plan. The company experienced softer than expected sales during the
month of September stemming primarily from weaker than expected federal
government sales, less than expected “at once”
equipment sales towards the end of football season and longer than
expected lead times on large bleacher and installation projects.
Managerially, we are pleased that efforts to increase gross profit
margins and limit spending allowed us to meet or exceed internal
operating objectives despite slower monthly sales in September.”
Going forward, we remain optimistic in our ability to accelerate top
line growth although growth rates may fluctuate from quarter to quarter.
This quarter, for example, had one less business day than last year’s
first fiscal quarter. In addition, Q1 FY06 was unusually strong with
organic sales of 20%+ higher than the previous year. This made for a
challenging net sales comparison.”
“We have today re-affirmed our FY07 EPS
guidance of $0.52 - $0.64 per fully diluted GAAP share and see FY07 net
sales in a range of $240 million to $250 million.”
Commenting on the SSPY Transaction, Mr. Blumenfeld stated: “We
are also very pleased to have completed the acquisition of the remaining
27% of SSPY shares we did not previously own. After nearly 18 months of
partial ownership of SSPY, completing the transaction opens the door for
synergy-related work to commence between the two companies. First steps
include migrating Collegiate Pacific’s
catalog businesses to SSPY’s SAP operating
platform and combining our assembly and distribution centers in Dallas,
TX. There are, we believe, substantial opportunities in the areas of SKU
reduction, cross-promotion of merchandise, leveraging marketing and
sales experience, continued improvement in purchasing power, and
additional efficiencies related to selling, general and administrative
expenses. On a general level, the combination of Collegiate Pacific’s
sales and marketing acumen with SSPY’s
infrastructure, technology and distribution should be a win-win for both
companies and their respective employees. I am pleased to introduce
Terry Babilla – formerly the President and
COO of SSPY – as President of Collegiate
Pacific. Terry and his team of talented managers and employees will be a
welcome addition to the organization.”
“With the transaction now complete, we will
internally measure our progress against a 3-year business plan that
calls for more than $30 million in earnings before interest, taxes,
depreciation and amortization, and earnings per fully diluted GAAP share
of more than $1.00 before the end of this 36 month period. There will
undoubtedly be operating peaks and valleys during this phase, however,
every short term decision made will be in the interest of moving the
company as efficiently as possible towards its 3-year business goals.
Dedicated focus to this objective, we believe, is the best way to
optimize franchise and shareholder value for all interested parties.”
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share
and per share amounts)
September 30, 2006
June 30,
2006
ASSETS
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents
$ 7,805
$ 4,079
Accounts receivable, net of allowance for doubtful accounts of
$1,669 and $1,496 respectively
41,630
31,004
Inventories
36,098
37,185
Current portion of deferred taxes
3,093
2,625
Prepaid income taxes
--
1,607
Prepaid expenses and other current assets
3,578
2,199
Total current assets
92,204
78,699
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $3,327
and $2,755, respectively
9,973
10,087
DEFERRED DEBT ISSUANCE COSTS, net of accumulated amortization of
$1,284 and $1,076, respectively
2,574
2,782
INTANGIBLE ASSETS, net of accumulated amortization of $2,555 and
$2,188, respectively
8,749
9,014
GOODWILL
39,458
40,280
DEFERRED INCOME TAXES
2,915
3,156
OTHER ASSETS, net
274
417
Total assets
$ 156,147
$ 144,435
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
$ 19,735
$ 14,802
Accrued liabilities
6,470
5,896
Dividends payable
256
256
Accrued interest
1,033
329
Current portion of long-term debt
2,187
2,210
Deferred tax liability
16
15
Income taxes payable
98
--
Total current liabilities
29,795
23,508
DEFERRED TAX LIABILITY
3,189
3,259
NOTES PAYABLE AND OTHER LONG-TERM DEBT
64,237
62,284
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST IN SUBSIDIARY
8,653
8,150
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value, 1,000,000 shares authorized; no
shares issued
--
--
Common stock, $0.01 par value, 50,000,000 shares authorized;
10,315,191 shares issued and
10,229,165 shares outstanding
103
103
Additional paid-in capital
43,162
43,162
Retained earnings
7,665
4,626
Treasury stock at cost, 86,026 shares
(657)
(657)
Total stockholders' equity
50,273
47,234
Total liabilities and stockholders' equity
$ 156,147
$ 144,435
COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except share
and per share amounts)
Three Months Ended
September 30,
2006
2005
Net sales
$ 68,163
$ 65,275
Cost of sales
44,100
43,960
Gross profit
24,063
21,315
Selling, general and administrative expenses
16,803
15,736
Operating profit
7,260
5,579
Other income (expense):
Interest income
47
46
Interest expense
(1,234)
(999)
Other income
37
25
Total other expense
(1,150)
(928)
Income before minority interest in income of consolidated
subsidiary and income taxes
6,110
4,651
Income tax provision
2,312
1,650
Minority interest in income of consolidated subsidiary, net of tax
503
426
Net income
$ 3,295
$ 2,575
Weighted average number of shares outstanding:
Basic
10,229,165
10,124,387
Diluted
13,782,914
14,068,662
Net income per share common stock – basic
$ 0.32
$ 0.25
Net income per share common stock –
diluted
$ 0.28
$ 0.22
Dividends declared per share common stock
$ 0.025
$ 0.025
This press release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include statements relating to Collegiate
Pacific's anticipated financial performance, business prospects, new
developments and similar matters, and/or statements preceded by,
followed by or that include the words "believes," "could," "expects,"
"anticipates," "estimates," "intends," "plans," or similar expressions.
These forward-looking statements are based on management's current
expectations and assumptions, which are inherently subject to
uncertainties, risks and changes in circumstances that are difficult to
predict. Actual results may differ materially from those suggested by
the forward-looking statements due to a variety of factors, including
changes in business, political, and economic conditions due to the
threat of future terrorist activity or otherwise, actions and
initiatives by current and potential competitors, and certain other
additional factors described in Collegiate Pacific's filings with the
Securities and Exchange Commission. Other unknown or unpredictable
factors also could have material adverse effects on Collegiate Pacific's
future results, performance or achievements. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events
discussed in this press release may not occur. You are cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of the date stated, or if no date is stated, as of the date of
this press release. Collegiate Pacific is not under any obligation and
does not intend to make publicly available any update or other revisions
to any of the forward-looking statements contained in this press release
to reflect circumstances existing after the date of this press release
or to reflect the occurrence of future events even if experience or
future events make it clear that any expected results expressed or
implied by those forward-looking statements will not be realized.
Collegiate Pacific Inc. (AMEX:BOO):
-- Q107 Operating Margins of 10.7% -- up 26%
-- Company Re-Affirms FY07 EPS Guidance of $0.52 - $0.64
-- SSPY Transaction Completed -- Synergy Work Begins
A conference call will be held today, November 13, 2006 at 3:30PM
CST / 4:30PM EST and may be accessed by dialing 800-706-7748 and using
passcode 80281036. A replay of today's call will be available for 7
days and may be accessed by dialing 888-286-8010 and using passcode
93868069.
Collegiate Pacific Inc. (AMEX:BOO) today announced results for its
first fiscal quarter ended September 30, 2006, and also announced the
successful completion of its acquisition earlier today of the
remaining shares of SSPY that it did not already own for a purchase
price of approximately $24.0 million in cash. Under the terms of the
September 21, 2006, definitive merger agreement, SSPY stockholders
will receive $8.80 in cash for each share of SSPY common stock. The
company financed the merger through borrowings under its new credit
facility with Merrill Lynch Business Financial Services, Inc.
In connection with closure of the SSPY transaction, the company
also announced the previously contemplated executive management
changes took effect today. This includes the resignation of Michael J.
Blumenfeld as Chief Executive Officer. Mr. Blumenfeld remains as
Chairman of the Board. Adam L. Blumenfeld, the former President of the
company, has been named Chief Executive Officer. Terrence M. Babilla
was appointed President of the company. Mr. Babilla was formerly the
President and Chief Operating Officer of SSPY.
Commenting on the first quarter, Adam Blumenfeld, Chief Executive
Officer, stated: "We are pleased this quarter met internal
expectations with respect to earnings per share and exceeded internal
expectations with respect to gross profit margin percentages, selling,
general and administrative expenses and operating profits. The quarter
was testament, in our view, to a heightened focus placed on delivery
of income. Earnings per share set a Company record at $0.28 per fully
diluted GAAP share -- approximately 27% higher than the year ago
results of $0.22 per GAAP share. Gross profit margins for the quarter
were 35.3%, which was slightly better than plan, and 265 basis points
higher than last year due to better selling discipline and pricing
power. Selling, general and administrative expenses were more than
$1.0 million under plan for the quarter and can be attributed to an
increased focus on cost controls across the platform. Operating margin
was 10.7% -- slightly ahead of plan and 26% better than the year ago
period. Net sales of approximately $68 million for the quarter were
approximately 4.4% better than last year, but fell short of our
internal plan. The company experienced softer than expected sales
during the month of September stemming primarily from weaker than
expected federal government sales, less than expected "at once"
equipment sales towards the end of football season and longer than
expected lead times on large bleacher and installation projects.
Managerially, we are pleased that efforts to increase gross profit
margins and limit spending allowed us to meet or exceed internal
operating objectives despite slower monthly sales in September."
Going forward, we remain optimistic in our ability to accelerate
top line growth although growth rates may fluctuate from quarter to
quarter. This quarter, for example, had one less business day than
last year's first fiscal quarter. In addition, Q1 FY06 was unusually
strong with organic sales of 20%+ higher than the previous year. This
made for a challenging net sales comparison."
"We have today re-affirmed our FY07 EPS guidance of $0.52 - $0.64
per fully diluted GAAP share and see FY07 net sales in a range of $240
million to $250 million."
Commenting on the SSPY Transaction, Mr. Blumenfeld stated: "We are
also very pleased to have completed the acquisition of the remaining
27% of SSPY shares we did not previously own. After nearly 18 months
of partial ownership of SSPY, completing the transaction opens the
door for synergy-related work to commence between the two companies.
First steps include migrating Collegiate Pacific's catalog businesses
to SSPY's SAP operating platform and combining our assembly and
distribution centers in Dallas, TX. There are, we believe, substantial
opportunities in the areas of SKU reduction, cross-promotion of
merchandise, leveraging marketing and sales experience, continued
improvement in purchasing power, and additional efficiencies related
to selling, general and administrative expenses. On a general level,
the combination of Collegiate Pacific's sales and marketing acumen
with SSPY's infrastructure, technology and distribution should be a
win-win for both companies and their respective employees. I am
pleased to introduce Terry Babilla - formerly the President and COO of
SSPY - as President of Collegiate Pacific. Terry and his team of
talented managers and employees will be a welcome addition to the
organization."
"With the transaction now complete, we will internally measure our
progress against a 3-year business plan that calls for more than $30
million in earnings before interest, taxes, depreciation and
amortization, and earnings per fully diluted GAAP share of more than
$1.00 before the end of this 36 month period. There will undoubtedly
be operating peaks and valleys during this phase, however, every short
term decision made will be in the interest of moving the company as
efficiently as possible towards its 3-year business goals. Dedicated
focus to this objective, we believe, is the best way to optimize
franchise and shareholder value for all interested parties."
-0-
*T
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share
and per share amounts)
September 30, June 30,
2006
2006
------------- -----------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $7,805 $4,079
Accounts receivable, net of allowance for
doubtful accounts of $1,669 and $1,496
respectively 41,630 31,004
Inventories 36,098 37,185
Current portion of deferred taxes 3,093 2,625
Prepaid income taxes -- 1,607
Prepaid expenses and other current assets 3,578 2,199
------------- -----------
Total current assets 92,204 78,699
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $3,327 and $2,755,
respectively 9,973 10,087
DEFERRED DEBT ISSUANCE COSTS, net of
accumulated amortization of $1,284 and
$1,076, respectively 2,574 2,782
INTANGIBLE ASSETS, net of accumulated
amortization of $2,555 and $2,188,
respectively 8,749 9,014
GOODWILL 39,458 40,280
DEFERRED INCOME TAXES 2,915 3,156
OTHER ASSETS, net 274 417
------------- -----------
Total assets $156,147 $144,435
============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $19,735 $14,802
Accrued liabilities 6,470 5,896
Dividends payable 256 256
Accrued interest 1,033 329
Current portion of long-term debt 2,187 2,210
Deferred tax liability 16 15
Income taxes payable 98 --
------------- -----------
Total current liabilities 29,795 23,508
DEFERRED TAX LIABILITY 3,189 3,259
NOTES PAYABLE AND OTHER LONG-TERM DEBT 64,237 62,284
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST IN SUBSIDIARY 8,653 8,150
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 1,000,000
shares authorized; no shares issued -- --
Common stock, $0.01 par value, 50,000,000
shares authorized;
10,315,191 shares issued and
10,229,165 shares outstanding 103 103
Additional paid-in capital 43,162 43,162
Retained earnings 7,665 4,626
Treasury stock at cost, 86,026 shares (657) (657)
------------- -----------
Total stockholders' equity 50,273 47,234
------------- -----------
Total liabilities and stockholders'
equity $156,147 $144,435
============= ===========
*T
-0-
*T
COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except share
and per share amounts)
Three Months Ended
September 30,
-----------------------
2006 2005
----------- -----------
Net sales $68,163 $65,275
Cost of sales 44,100 43,960
----------- -----------
Gross profit 24,063 21,315
Selling, general and administrative expenses 16,803 15,736
----------- -----------
Operating profit 7,260 5,579
----------- -----------
Other income (expense):
Interest income 47 46
Interest expense (1,234) (999)
Other income 37 25
----------- -----------
Total other expense (1,150) (928)
----------- -----------
Income before minority interest in income
of consolidated subsidiary and income
taxes 6,110 4,651
Income tax provision 2,312 1,650
Minority interest in income of consolidated
subsidiary, net of tax 503 426
----------- -----------
Net income $3,295 $2,575
=========== ===========
Weighted average number of shares outstanding:
Basic 10,229,165 10,124,387
=========== ===========
Diluted 13,782,914 14,068,662
=========== ===========
Net income per share common stock - basic $0.32 $0.25
=========== ===========
Net income per share common stock - diluted $0.28 $0.22
=========== ===========
Dividends declared per share common stock $0.025 $0.025
=========== ===========
*T
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include statements relating to
Collegiate Pacific's anticipated financial performance, business
prospects, new developments and similar matters, and/or statements
preceded by, followed by or that include the words "believes,"
"could," "expects," "anticipates," "estimates," "intends," "plans," or
similar expressions. These forward-looking statements are based on
management's current expectations and assumptions, which are
inherently subject to uncertainties, risks and changes in
circumstances that are difficult to predict. Actual results may differ
materially from those suggested by the forward-looking statements due
to a variety of factors, including changes in business, political, and
economic conditions due to the threat of future terrorist activity or
otherwise, actions and initiatives by current and potential
competitors, and certain other additional factors described in
Collegiate Pacific's filings with the Securities and Exchange
Commission. Other unknown or unpredictable factors also could have
material adverse effects on Collegiate Pacific's future results,
performance or achievements. In light of these risks, uncertainties,
assumptions and factors, the forward-looking events discussed in this
press release may not occur. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of
the date stated, or if no date is stated, as of the date of this press
release. Collegiate Pacific is not under any obligation and does not
intend to make publicly available any update or other revisions to any
of the forward-looking statements contained in this press release to
reflect circumstances existing after the date of this press release or
to reflect the occurrence of future events even if experience or
future events make it clear that any expected results expressed or
implied by those forward-looking statements will not be realized.