Everlast (NASDAQ:EVST)
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From May 2019 to May 2024
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 2007 second quarter and
six-months ended June 30, 2007.
For the second quarter ended June 30, 2007, net revenues increased 24%
to $12.2 million, compared to $9.8 million in the same period in 2006.
Growth in net revenue resulted from a 28% increase in sporting goods
sales to a record $8.7 million. The increase resulted from expanded
distribution and continued strong sell-through. Net licensing revenues
increased 15% to approximately $3.5 million vs. $3.0 million in the
second quarter of 2006. The growth was driven by organic increases in
licensing income by our worldwide licensees, particularly in South
Korea, Chile and in select categories in the United States.
In the second quarter of 2007, the Company’s
gross margin was 54.1%, compared with 45.7% in the second quarter a year
ago. The improvement was generated by a 14.2 percent improvement in
sporting goods gross margins. The increase in sporting goods gross
margins was due to a combination of higher initial margins on new
products, logistical and operational efficiencies, and improvements in
sourcing, benefiting from initiatives implemented since the second half
of fiscal 2006. This was slightly offset by the revenue mix shift toward
equipment.
Second quarter operating income grew 36% to $2.1 million, or 17.5% of
net revenues, versus the year-ago level of $1.6 million, or 15.9% of net
revenues. This increase was primarily driven by higher revenues and
improved gross profit margins, partially offset by planned increases in
both marketing development initiatives and increased overhead costs
within general and administrative expenses to support our Global Brand
Integration.
During the second quarter of 2007, the Company recorded a $4.2 million
pre-tax non-recurring merger related charge related to a merger
agreement, as amended, signed on June 28, 2007 with Brands Holdings
Limited, a private company limited by shares incorporated in England and
Wales, EWI Acquisition, Inc., a Delaware corporation and a wholly owned
subsidiary of Brands Holdings Limited (“Brand
Holdings”) The $4.2 million pre-tax charge is
made up of approximately $470,000 in costs associated with a follow-on
common stock offering that we have agreed to cancel as a condition to
the closing of this merger, $745,000 in transaction costs related to the
pending merger and $3.0 million termination fee incurred as a result of
the termination of the Hidary Group Acquisition LLC merger agreement
signed on June 1, 2007.
Adjusted earnings per diluted share for the second quarter of 2007,
adding back approximately $0.63 of non-recurring merger related
transaction costs and $0.05 of non-cash expense associated with
stock-based compensation, was $0.21 per diluted share, a 62% increase
over adjusted earnings of $0.13 per diluted share in 2006. The second
quarter 2006 amount adds back approximately $0.03 of non-cash expense
associated with stock-based compensation. Reported basic and diluted
loss per share for the second quarter of 2007 was $(0.46) compared with
earnings per diluted share of $0.10 in second quarter of 2006.
Seth Horowitz, Chairman, President and Chief Executive of Everlast
Worldwide Inc., said “We are very proud of the
strong results we achieved for the second quarter. The 24% increase in
net revenues and continued improvement in gross margins is enabling us
to invest in our brand for both short-term and long-term growth to help
us reinforce the premier brand our consumers have come to expect. Our
sporting goods business continues to see strong sell-ins and
sell-through, as evidenced by the 28% quarter over quarter increase,
which has been consistent with the 25% plus percent year-over-year
quarterly growth experienced in the last four sequential quarters. The
additional volume and the significant reductions in sporting goods
equipment product and logistical costs are enabling us to achieve
significant improvements in our sporting goods gross margin, as
demonstrated by the 14.2 percent improvement in the second quarter
margins over the prior year quarter. Also strong, our licensing business
grew at a 15% rate this quarter fueled by strong wholesale sales in
South Korea, Chile, and licensed categories in North America.”
Mr. Horowitz continued, “We continue to
implement our Global Brand Integration, which is benefiting our entire
business. We recently launched a U.S. trade print media campaign
centered around our new tag-line, “Greatness
is Within”™ which
also includes our refreshed Everlast logo and global company icon. This
marketing message has been and will be communicated and tailored around
our product deployment and targeted to capitalize on the growing
consumer trends of product categories “Train,
Compete, Live” within our sporting goods
equipment, apparel and footwear product offerings. This strategy enables
us to maximize the global positioning of our brand, utilizing the
strengths of training, competitive and athleisure and sportswear
products that we have exhibited in select territories and select
categories and now aimed to achieve on a global basis. We have recently
implemented this strategy by partnering with major sporting goods stores
across the U.S. to build out Everlast concept and focus shops, including
Dicks Sporting Goods stores, The Sports Authority stores and Big 5
Sporting Goods stores. “
About Everlast Worldwide Inc.
Everlast Worldwide Inc. is a leading designer, manufacturer and marketer
of boxing and fitness related sporting goods equipment under the
well-recognized Everlast brand name and a worldwide licensor of the
Everlast brand for apparel, footwear, sporting goods equipment and other
active lifestyle products and accessories. Since 1910, Everlast has been
the preeminent brand in the world of boxing and among the most
recognized brands in the overall sporting goods and apparel industries.
In order to capitalize on the rich heritage and authenticity of the
Everlast brand, the company has extended the Everlast brand outside of
the boxing ring into complementary product categories. Our strategy is
to continue to leverage the unique qualities represented by the Everlast
brand—Strength, Dedication, Individuality and
Authenticity — to become a leading global
athletic brand and a necessary part of the lives of consumers who train,
compete and live an active lifestyle.
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.
(Tables Follow)
EVERLAST WORLDWIDE INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Six Months Ended
June 30,
June 30,
2007
2006
2007
2006
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Net sales
$8,674,000
$6,798,000
$17,723,000
$13,765,000
Net license revenues
3,482,000
3,039,000
6,809,000
6,042,000
Net revenues
12,156,000
9,837,000
24,532,000
19,807,000
Cost of goods sold
5,585,000
5,340,000
11,878,000
10,869,000
Gross profit
6,571,000
4,497,000
12,654,000
8,938,000
Operating expenses:
Selling and shipping
2,259,000
1,320,000
4,327,000
2,886,000
General and administrative
1,983,000
1,476,000
3,618,000
2,813,000
Stock-based compensation
202,000
135,000
363,000
219,000
4,444,000
2,931,000
8,308,000
5,918,000
Operating income
2,127,000
1,566,000
4,346,000
3,020,000
Other income (expense):
Non-recurring merger related costs
(4,215,000)
-
(4,215,000)
-
Gain on early extinguishment of preferred stock and prepayment of
notes payable, net
-
-
-
2,032,000
Interest expense and financing costs, net
(848,000)
(823,000)
(1,761,000)
(1,482,000)
(5,063,000)
(823,000)
(5,976,000)
550,000
(Loss) income before (benefit) provision for income taxes
(2, 936,000)
743,000
(1,630,000)
3,570,000
(Benefit) provision for income taxes
(1,066,000)
341,000
(494,000)
684,000
Net (loss) income
($1,870,000)
$402,000
($1,136,000)
$2,886,000
Basic weighted average common shares outstanding
4,078,000
3,883,000
4,072,000
3,750,000
Diluted weighted average common shares outstanding
4,078,000
4,157,000
4,072,000
4,033,000
Net basic (loss) earnings per share
($0.46)
$0.10
($0.28)
$0.77
Net diluted (loss) earnings per share
($0.46)
$0.10
($0.28)
$0.72
Note: As a result of the net loss per share for the three and six months
ended June 30, 2007, the denominator for fully diluted shares excludes
the effects of stock options, warrants and other equity consideration
aggregating to 307,000 and 336,000 respectively, as the results would be
anti-dilutive. The basic per share affect of the non-cash stock based
compensation and non-recurring merger related transaction costs, net of
tax, is $0.68 per basic share.
EVERLAST WORLDWIDE INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30,
December 31,
2007
2006
ASSETS
Current assets:
Cash and cash equivalents
$
150,000
$
216,000
Accounts and licensing receivables - net
9,984,000
15,649,000
Inventories
9,577,000
8,766,000
Prepaid expenses and other current assets
1,703,000
1,098,000
Total current assets
21,414,000
25,729,000
Property and equipment, net
6,321,000
6,235,000
Goodwill
6,718,000
6,718,000
Trademarks, net
22,664,000
22,664,000
Restricted cash
1,136,000
1,109,000
Other assets
2,485,000
2,821,000
$
60,738,000
$
65,276,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to factor
8,882,000
9,079,000
Accounts payable
4,418,000
5,638,000
Current maturities of long term debt
4,040,000
3,953,000
Mortgage payable
2,320,000
2,419,000
Accrued expenses and other liabilities
971,000
1,696,000
Total current liabilities
20,631,000
22,785,000
Other liabilities
1,380,000
667,000
Long term debt, net of current maturities
17,785,000
19,161,000
Total liabilities
39,796,000
42,613,000
Stockholders' equity:
Common stock, par value $.002;19,000,000 shares authorized,4,080,023
outstanding
10,000
10,000
Paid-in capital
17,811,000
17,380,000
Retained earnings
3,848,000
6,000,000
21,669,000
23,390,000
Less treasury stock
(727,000)
(727,000)
Total stockholders' equity
20,942,000
22,663,000
$
60,738,000
$
65,276,000
EVERLAST WORLDWIDE INC. & SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME TO EBITDA
EXCLUDING CERTAIN NON-CASH CHARGES
Three Months Ended
Six Months Ended
June 30,
June 30,
2007
2006
2007
2006
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Operating income as reported GAAP basis
$2,127,000
$1,566,000
$4,346,000)0
$3,020,000
Adjustments:
Depreciation and amortization included in operating income
231,000
184,000
448,000
344,000
Non-cash stock based compensation
202,000
135,000
363,000
219,000
Adjusted EBITDA (Earnings excluding certain costs before interest,
taxes, depreciation and amortization)
$2,560,000
$1,885,000
$5,157,000
$3,583,000
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.