Everlast (NASDAQ:EVST)
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Everlast® Worldwide Inc. (Nasdaq: EVST),
manufacturer, marketer and licensor of sporting goods, apparel, footwear
and other active lifestyle products under the Everlast brand name, today
announced its financial results for its fiscal third quarter and
nine-months ended September 30, 2006.
For the third quarter ended September 30, 2006, net revenues increased
27% to $13.4 million, as compared to $10.6 million in the same period in
2005. Net licensing revenues for the third quarter of 2006 were $3.0
million, as compared to $2.8 million in the same period a year ago. As
was announced in the first quarter, licensing revenues have been
impacted by the Company’s decision not to
renew its previous footwear license as well as an increase in licensing
commissions resulting from the litigation settlement which requires the
Company to pay commissions to a former agent of Everlast during 2006.
These two factors negatively impacted licensing revenues in the second
quarter by approximately $425,000. Revenues from sporting goods for the
third quarter were $10.5 million, a record, as compared to $7.8 million
in 2005, an increase of 35%. The increase was the result of organic
growth, driven by new products, new channels of distribution and strong
consumer awareness of our brand as a result of the airing of Season 2 of
The Contender, which premiered July 18, 2006.
Gross margin for the quarter improved to 42.7%, compared with 42.0% in
the third quarter a year ago. The higher gross profit margin was
achieved from improved margins on sporting goods equipment due to some
operational efficiencies and product cost reductions.
The Company achieved a record 29% increase in operating income from
continuing operations to $2.2 million, versus the year-ago level of $1.7
million. The increase in operating income resulted from improved gross
margins. Operating expenses, as a percentage of net revenues, remained
flat, at approximately 26% of net revenues as the Company incurred and
anticipated higher marketing and advertising costs associated with
Season 2 of The Contender.
Adjusted earnings per diluted share, excluding the $0.03 effects of
stock based compensation, and $0.06 effects of warrant issuance costs,
for the third quarter of fiscal 2006 was $0.25 per diluted share, as
compared to a net income from continuing operations of $0.16 per diluted
share, in the 2005 comparable period. The Company believes that this is
a more appropriate comparison as stock compensation and warrant costs
were not included in the third quarter year-ago calculation.
Seth Horowitz, Chairman, President and Chief Executive of Everlast
Worldwide Inc., said, “We are thrilled to be
able to report record results from continuing operations this quarter.
Everlast clearly has a tremendous amount of momentum, and we feel very
good about the overall direction of the brand. We’re
seeing growth across all aspects of our business, starting with our base
sporting goods segment. Participation continues to rise in boxing and
mixed martial arts, and Everlast is uniquely positioned to benefit from
the trend. We’re constantly adding innovation
to our sporting goods and working with our licensees to capitalize on
the strength of the Everlast brand.”
Mr. Horowitz continued, “the Company is
reiterating the following financial guidance for fiscal year 2006,
although results are expected to be towards the high end of the
following ranges:
Net revenues ranging between $46 to $48.5 million
EBITDA (excluding the effects of non-cash equity awards) ranging
between $8.7 to $9.3 million
Diluted earnings per share (excluding the effects of stock-based
compensation expense) between $0.68 and $0.73”
“We are also introducing guidance for 2007, as
follows:
Net revenues ranging between $53 to $55 million
EBITDA (excluding the effects of non-cash equity awards) ranging
between $10.4 to $10.8 million
Diluted earnings per share between $0.93 and $0.98, which excludes the
impact of about $0.20 per share in stock based compensation expenses.”
The Company will be conducting a conference call today to discuss its
third quarter 2006 results of operations and financial condition by
hosting a conference call at 4:30 p.m. Eastern Time. Parties interested
in participating in the conference call may dial-in at (800) 289-0726,
while international callers may dial-in at (913) 981-5545. The
conference call will be webcast and can be accessed at www.viavid.net.
A recording of the conference call will be available until November 16,
2006 by dialing (888) 203-1112 or (719) 457-0820 for international
callers, and entering the passcode of 2704176.
About Everlast Worldwide Inc.
Everlast Worldwide Inc. manufactures, markets and licenses sporting
goods, apparel, footwear and other active lifestyle products under the
Everlast brand name. Since 1910, Everlast has been the preeminent brand
in the world of boxing and is among the most dominant brands in the
overall sporting goods and apparel industries. Over the past 96 years,
Everlast products have become the “Choice of
Champions™”,
having been used for training and professional fights by many of the
biggest names in the sport. Everlast is the market leader in nearly all
of its product categories, responsible for leading eight of the top ten
boxing equipment products in sales. In addition to producing and
marketing the equipment and accessories, Everlast Worldwide Inc.
licenses its brand to providers of men’s and
women’s sportswear and active wear, children’s
wear, footwear, watches, cardiovascular exercise equipment, nutritional
foods and gym/duffel bags to name just a few categories. The company’s
Web site can be found at http://www.everlast.com.
Statements made in this Press Release that are estimates of past or
future performance are based on a number of factors, some of which are
outside of the Company's control. Statements made in this Press Release
that state the intentions, beliefs, expectations or predictions of
Everlast Worldwide, Inc. and its management for the future are
forward-looking statements. It is important to note that actual results
could differ materially from those projected in such forward-looking
statements. Information concerning factors that could cause actual
results to differ materially from those in forward-looking statements is
contained from time to time in filings of Everlast Worldwide with the
U.S. Securities and Exchange Commission. Copies of these filings may be
obtained by contacting Everlast Worldwide or the SEC.
EVERLAST WORLDWIDE INC. & SUBSIDIARIESCONSOLIDATED
STATEMENTS OF OPERATIONS
Three Months Ended
Nine Months Ended
September 30,
September 30,
2006
2005
2006
2005
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Net sales
$10,450,000
$7,753,000
$24,215,000
$ 20,290,000
Net license revenues
2,964,000
2,807,000
9,006,000
8,845,000
Net revenues
13,414,000
10,560,000
33,221,000
29,135,000
Cost of goods sold
7,691,000
6,125,000
18,560,000
16,345,000
Gross profit
5,723,000
4,435,000
14,661,000
12,790,000
Operating expenses:
Selling and shipping
1,848,000
1,086,000
4,734,000
3,443,0008
General and administrative
1,353,000
1,444,000
4,166,000
4,711,000
Restructuring and non-recurring charges
-
-
-
273,000
Stock-based compensation and costs in connection with warrant
issuance, net
357,000
-
576,000
182,000
Amortization
-
228,000
-
684,000
3,558,000
2,758,000
9,476,000
9,293,000
Income from continuing operations
2,165,000
1,677,000
5,185,000
3,497,000
Other income (expense):
Gain on early extinguishment of preferred stock and prepayment of
notes payable, net
-
-
2,032,000
-
Interest expense and financing costs
(893,000)
(554,000)
(2,382,000)
(1,631,000)
Investment income
4,000
6,000
11,000
17,000
(889,000)
(548,000)
(339,000)
(1,614,000)
Income before provision for income taxes from continuing operations
1,276,000
1,129,000
4,846,000
1,883,000
Provision for income taxes
587,000
456,000
1,271,000
678,000
Net income from continuing operations
$689,000
$673,000
$3,575,000
$1,205,000
Loss from discontinued components, net of tax
-
(498,000)
-
(1,720,000)
Net income (loss) available to common stockholders
$689,000
$175,000
$3,575,000
($515,000)
Basic weighted average common shares outstanding
3,912,216
3,385,858
3,804,488
3,282,294
Diluted weighted average common shares outstanding
4,179,959
4,114,563
4,115,573
3,848,282
Basic earnings per share from continuing operations
$0.18
$0.20
$0.94
$0.37
Diluted earnings per share from continuing operations
$0.16
$0.16
$0.87
$0.31
Basic loss per share from discontinued component
-
($0.15)
-
($0.52)
Diluted loss per share from discontinued component
-
($0.12)
-
($0.45)
Net basic earnings (loss) per share
$0.18
$0.05
$0.94
($0.15)
Net diluted earnings (loss) per share
$0.16
$0.04
$0.87
($0.14)
EBITDA (Operating earnings excluding certain non-cash and
non-recurring costs)
$2,679,000
$2,075,000
$6,269,000
$5,115,000
EVERLAST WORLDWIDE INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30,
December 31,
2006
2005
ASSETS
Current assets:
Cash and cash equivalents
$
261,000
$
58,000
Accounts and licensing receivables - net
11,566,000
11,117,000
Inventories
9,455,000
6,997,000
Inventories of discontinued component
-
940,000
Prepaid expenses and other current assets
1,596,000
2,761,000
Total current assets
22,878,000
21,873,000
Property and equipment, net
6,191,000
6,213,000
Goodwill
6,718,000
6,718,000
Trademarks, net
22,664,000
22,664,000
Restricted cash
1,096,000
1,059,000
Other assets
2,621,000
2,914,000
$
62,168,000
$
61,441,000
LIABILITIES, REDEEMABLE PARTICIPATING PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
Current liabilities:
Due to factor
5,921,000
13,028,000
Accounts payable
7,465,000
3,159,000
Current maturities of long term debt
2,776,000
2,141,000
Accrued expenses and other liabilities
2,185,000
3,252,000
Total current liabilities
18,347,000
21,580,000
License deposits payable
435,000
465,000
Long term debt, net of current maturities
23,450,000
26,531,000
Total liabilities
42,232,000
48,576,000
Stockholders' equity:
Common stock, par value $.002; 19,000,000 shares authorized,
4,028,657 and 3,378,743 outstanding
10,000
8,000
Class A common stock, par value $.01; 100,000 shares authorized; 0
and 100,000 shares issued and outstanding
-
1,000
Paid-in capital
15,802,000
12,307,000
Retained earnings
4,851,000
1,276,000
20,663,000
13,592,000
Less treasury stock
(727,000)
(727,000)
Total stockholders' equity
19,936,000
12,865,000
$
62,168,000
$
61,441,000
EVERLAST WORLDWIDE INC. & SUBSIDIARIES
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO EBITDA
EXCLUDING CERTAIN NON-CASH CHARGES FROM CONTINUING OPERATIONS
Three Months Ended
Nine Months Ended
September 30,
September 30,
2006
2005
2006
2005
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Income from continuing operations as reported GAAP basis
$2,165,000
$1,677,000
$5,185,000)0
$3,497,000
Adjustments:
Depreciation and amortization included in operating income
157,000
398,000
508,000
1,163,000
Restructuring and non-recurring costs
-
-
273,000
Non-cash stock based compensation and non-cash costs in connection
with warrant issuance
357,000
-
576,000
182,000
Adjusted EBITDA (Earnings excluding certain costs before interest,
taxes, depreciation and amortization)
$2,679,000
$2,075,000
$6,269,000
$5,115,000
Note: To supplement its financial statements presented on a GAAP
basis, the Company uses non-GAAP additional measures of EBITDA
adjusted to exclude certain non-cash costs in connection with stock
based compensation and warrant issuance costs. The Company believes
that the use of these additional measures is appropriate to enhance
an overall understanding of its past financial performance. These
adjustments to the Company's GAAP results are made with the intent
of providing both management and investors with a more complete
understanding of the underlying operational results and trends and
its marketplace performance. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for net earnings or earnings per share prepared in
accordance with generally accepted accounting principles in the
United States.
Everlast(R) Worldwide Inc. (Nasdaq: EVST), manufacturer, marketer
and licensor of sporting goods, apparel, footwear and other active
lifestyle products under the Everlast brand name, today announced its
financial results for its fiscal third quarter and nine-months ended
September 30, 2006.
For the third quarter ended September 30, 2006, net revenues
increased 27% to $13.4 million, as compared to $10.6 million in the
same period in 2005. Net licensing revenues for the third quarter of
2006 were $3.0 million, as compared to $2.8 million in the same period
a year ago. As was announced in the first quarter, licensing revenues
have been impacted by the Company's decision not to renew its previous
footwear license as well as an increase in licensing commissions
resulting from the litigation settlement which requires the Company to
pay commissions to a former agent of Everlast during 2006. These two
factors negatively impacted licensing revenues in the second quarter
by approximately $425,000. Revenues from sporting goods for the third
quarter were $10.5 million, a record, as compared to $7.8 million in
2005, an increase of 35%. The increase was the result of organic
growth, driven by new products, new channels of distribution and
strong consumer awareness of our brand as a result of the airing of
Season 2 of The Contender, which premiered July 18, 2006.
Gross margin for the quarter improved to 42.7%, compared with
42.0% in the third quarter a year ago. The higher gross profit margin
was achieved from improved margins on sporting goods equipment due to
some operational efficiencies and product cost reductions.
The Company achieved a record 29% increase in operating income
from continuing operations to $2.2 million, versus the year-ago level
of $1.7 million. The increase in operating income resulted from
improved gross margins. Operating expenses, as a percentage of net
revenues, remained flat, at approximately 26% of net revenues as the
Company incurred and anticipated higher marketing and advertising
costs associated with Season 2 of The Contender.
Adjusted earnings per diluted share, excluding the $0.03 effects
of stock based compensation, and $0.06 effects of warrant issuance
costs, for the third quarter of fiscal 2006 was $0.25 per diluted
share, as compared to a net income from continuing operations of $0.16
per diluted share, in the 2005 comparable period. The Company believes
that this is a more appropriate comparison as stock compensation and
warrant costs were not included in the third quarter year-ago
calculation.
Seth Horowitz, Chairman, President and Chief Executive of Everlast
Worldwide Inc., said, "We are thrilled to be able to report record
results from continuing operations this quarter. Everlast clearly has
a tremendous amount of momentum, and we feel very good about the
overall direction of the brand. We're seeing growth across all aspects
of our business, starting with our base sporting goods segment.
Participation continues to rise in boxing and mixed martial arts, and
Everlast is uniquely positioned to benefit from the trend. We're
constantly adding innovation to our sporting goods and working with
our licensees to capitalize on the strength of the Everlast brand."
Mr. Horowitz continued, "the Company is reiterating the following
financial guidance for fiscal year 2006, although results are expected
to be towards the high end of the following ranges:
-- Net revenues ranging between $46 to $48.5 million
-- EBITDA (excluding the effects of non-cash equity awards)
ranging between $8.7 to $9.3 million
-- Diluted earnings per share (excluding the effects of
stock-based compensation expense) between $0.68 and $0.73"
"We are also introducing guidance for 2007, as follows:
-- Net revenues ranging between $53 to $55 million
-- EBITDA (excluding the effects of non-cash equity awards)
ranging between $10.4 to $10.8 million
-- Diluted earnings per share between $0.93 and $0.98, which
excludes the impact of about $0.20 per share in stock based
compensation expenses."
The Company will be conducting a conference call today to discuss
its third quarter 2006 results of operations and financial condition
by hosting a conference call at 4:30 p.m. Eastern Time. Parties
interested in participating in the conference call may dial-in at
(800) 289-0726, while international callers may dial-in at (913)
981-5545. The conference call will be webcast and can be accessed at
www.viavid.net. A recording of the conference call will be available
until November 16, 2006 by dialing (888) 203-1112 or (719) 457-0820
for international callers, and entering the passcode of 2704176.
About Everlast Worldwide Inc.
Everlast Worldwide Inc. manufactures, markets and licenses
sporting goods, apparel, footwear and other active lifestyle products
under the Everlast brand name. Since 1910, Everlast has been the
preeminent brand in the world of boxing and is among the most dominant
brands in the overall sporting goods and apparel industries. Over the
past 96 years, Everlast products have become the "Choice of
Champions(TM)", having been used for training and professional fights
by many of the biggest names in the sport. Everlast is the market
leader in nearly all of its product categories, responsible for
leading eight of the top ten boxing equipment products in sales. In
addition to producing and marketing the equipment and accessories,
Everlast Worldwide Inc. licenses its brand to providers of men's and
women's sportswear and active wear, children's wear, footwear,
watches, cardiovascular exercise equipment, nutritional foods and
gym/duffel bags to name just a few categories. The company's Web site
can be found at http://www.everlast.com.
Statements made in this Press Release that are estimates of past
or future performance are based on a number of factors, some of which
are outside of the Company's control. Statements made in this Press
Release that state the intentions, beliefs, expectations or
predictions of Everlast Worldwide, Inc. and its management for the
future are forward-looking statements. It is important to note that
actual results could differ materially from those projected in such
forward-looking statements. Information concerning factors that could
cause actual results to differ materially from those in
forward-looking statements is contained from time to time in filings
of Everlast Worldwide with the U.S. Securities and Exchange
Commission. Copies of these filings may be obtained by contacting
Everlast Worldwide or the SEC.
-0-
*T
EVERLAST WORLDWIDE INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -------------------------
2006 2005 2006 2005
------------ ----------- ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales $10,450,000 $7,753,000 $24,215,000 $20,290,000
Net license revenues 2,964,000 2,807,000 9,006,000 8,845,000
------------ ----------- ------------ ------------
Net revenues 13,414,000 10,560,000 33,221,000 29,135,000
------------ ----------- ------------ ------------
Cost of goods sold 7,691,000 6,125,000 18,560,000 16,345,000
------------ ----------- ------------ ------------
Gross profit 5,723,000 4,435,000 14,661,000 12,790,000
Operating expenses:
Selling and
shipping 1,848,000 1,086,000 4,734,000 3,443,0008
General and
administrative 1,353,000 1,444,000 4,166,000 4,711,000
Restructuring and
non-recurring
charges - - - 273,000
Stock-based
compensation and
costs in
connection with
warrant issuance,
net 357,000 - 576,000 182,000
Amortization - 228,000 - 684,000
------------ ----------- ------------ ------------
3,558,000 2,758,000 9,476,000 9,293,000
------------ ----------- ------------ ------------
Income from
continuing
operations 2,165,000 1,677,000 5,185,000 3,497,000
------------ ----------- ------------ ------------
Other income
(expense):
Gain on early
extinguishment of
preferred stock
and prepayment of
notes payable,
net - - 2,032,000 -
Interest expense
and financing
costs (893,000) (554,000) (2,382,000) (1,631,000)
Investment income 4,000 6,000 11,000 17,000
------------ ----------- ------------ ------------
(889,000) (548,000) (339,000) (1,614,000)
------------ ----------- ------------ ------------
Income before
provision for
income taxes from
continuing
operations 1,276,000 1,129,000 4,846,000 1,883,000
Provision for income
taxes 587,000 456,000 1,271,000 678,000
------------ ----------- ------------ ------------
Net income from
continuing
operations $689,000 $673,000 $3,575,000 $1,205,000
============ =========== ============ ============
Loss from
discontinued
components, net of
tax - (498,000) - (1,720,000)
------------ ----------- ------------ ------------
Net income (loss)
available to common
stockholders $689,000 $175,000 $3,575,000 ($515,000)
============ =========== ============ ============
Basic weighted
average common
shares outstanding 3,912,216 3,385,858 3,804,488 3,282,294
============ =========== ============ ============
Diluted weighted
average common
shares outstanding 4,179,959 4,114,563 4,115,573 3,848,282
============ =========== ============ ============
Basic earnings per
share from
continuing
operations $0.18 $0.20 $0.94 $0.37
============ =========== ============ ============
Diluted earnings per
share from
continuing
operations $0.16 $0.16 $0.87 $0.31
============ =========== ============ ============
Basic loss per share
from discontinued
component - ($0.15) - ($0.52)
============ =========== ============ ============
Diluted loss per
share from
discontinued
component - ($0.12) - ($0.45)
============ =========== ============ ============
Net basic earnings
(loss) per share $0.18 $0.05 $0.94 ($0.15)
============ =========== ============ ============
Net diluted earnings
(loss) per share $0.16 $0.04 $0.87 ($0.14)
============ =========== ============ ============
EBITDA (Operating
earnings excluding
certain non-cash
and non-recurring
costs) $2,679,000 $2,075,000 $6,269,000 $5,115,000
============ =========== ============ ============
*T
-0-
*T
EVERLAST WORLDWIDE INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2006 2005
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 261,000 $ 58,000
Accounts and licensing receivables - net 11,566,000 11,117,000
Inventories 9,455,000 6,997,000
Inventories of discontinued component - 940,000
Prepaid expenses and other current
assets 1,596,000 2,761,000
------------- -------------
Total current assets 22,878,000 21,873,000
Property and equipment, net 6,191,000 6,213,000
Goodwill 6,718,000 6,718,000
Trademarks, net 22,664,000 22,664,000
Restricted cash 1,096,000 1,059,000
Other assets 2,621,000 2,914,000
------------- -------------
$ 62,168,000 $ 61,441,000
============= =============
LIABILITIES, REDEEMABLE PARTICIPATING PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
Current liabilities:
Due to factor 5,921,000 13,028,000
Accounts payable 7,465,000 3,159,000
Current maturities of long term debt 2,776,000 2,141,000
Accrued expenses and other liabilities 2,185,000 3,252,000
------------- -------------
Total current liabilities 18,347,000 21,580,000
License deposits payable 435,000 465,000
Long term debt, net of current
maturities 23,450,000 26,531,000
------------- -------------
Total liabilities 42,232,000 48,576,000
------------- -------------
Stockholders' equity:
Common stock, par value $.002; 19,000,000
shares authorized, 4,028,657 and
3,378,743 outstanding 10,000 8,000
Class A common stock, par value $.01;
100,000 shares authorized; 0 and 100,000
shares issued and outstanding - 1,000
Paid-in capital 15,802,000 12,307,000
Retained earnings 4,851,000 1,276,000
------------- -------------
20,663,000 13,592,000
Less treasury stock (727,000) (727,000)
------------- -------------
Total stockholders' equity 19,936,000 12,865,000
------------- -------------
$ 62,168,000 $ 61,441,000
============= =============
*T
-0-
*T
EVERLAST WORLDWIDE INC. & SUBSIDIARIES
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO EBITDA
EXCLUDING CERTAIN NON-CASH CHARGES FROM CONTINUING OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -------------------------
2006 2005 2006 2005
----------- ----------- ------------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Income from
continuing
operations as
reported GAAP basis $2,165,000 $1,677,000 $5,185,000)0 $3,497,000
----------- ----------- ------------- -----------
Adjustments:
Depreciation and
amortization
included in
operating income 157,000 398,000 508,000 1,163,000
Restructuring and
non-recurring costs - - 273,000
Non-cash stock based
compensation and
non-cash costs in
connection with
warrant issuance 357,000 - 576,000 182,000
----------- ----------- ------------- -----------
Adjusted EBITDA
(Earnings excluding
certain costs before
interest, taxes,
depreciation and
amortization) $2,679,000 $2,075,000 $6,269,000 $5,115,000
=========== =========== ============= ===========
Note: To supplement its financial statements presented on a GAAP
basis, the Company uses non-GAAP additional measures of EBITDA
adjusted to exclude certain non-cash costs in connection with stock
based compensation and warrant issuance costs. The Company believes
that the use of these additional measures is appropriate to enhance
an overall understanding of its past financial performance. These
adjustments to the Company's GAAP results are made with the intent of
providing both management and investors with a more complete
understanding of the underlying operational results and trends and
its marketplace performance. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for net earnings or earnings per share prepared in
accordance with generally accepted accounting principles in the
United States.
*T