Sport Supply Grp. Del (MM) (NASDAQ:RBI)
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Sport Supply Group, Inc. (NASDAQ: RBI) today reported a 105% increase in
its fully diluted earnings per share for the fiscal year ending June 30,
2008. Metrics for the Quarter and the Year Ending period are noted below:
For the Fourth Fiscal Quarter Ending June 30, 2008
Net Sales Up 8.9% to $61.1 Million
Gross Margin Percentage Up 180 basis points from 34.4% to 36.2%
SG&A Expenses Down 2% from $18.4 Million to $18.1 Million
Operating Profit Up 352% from $895,000 to $4.0 Million
Fully Diluted EPS Up from ($0.03) to $0.15
For the Fiscal Year Ending June 30, 2008
Net Sales Up 6.1% to $251.4 Million
Gross Margin Percentage Up 100 basis points from 35.2% to 36.2%
SG&A Expenses Up less than 1% from $70.8 Million to $71.37 Million
Operating Profit Up 55% from $12.69 Million to $19.7 Million
Fully Diluted EPS Up from $0.37 to $0.76
EBITDA Up 44% from $16.3 Million to $23.6 Million; Net Income Up 152%
from $3.9 Million to $9.7 Million
Cash on-hand Up 262% from $5.6 Million to $20.5 Million
Free Cash Flow from Operations of $1.75 Per Share; Cash Flow from
Operations of $1.89 Per Share
Adam Blumenfeld, Chairman and CEO, stated: “We
are pleased to report outstanding results for the Quarter and Year ended
June 30, 2008. As noted above, every operating metric showed significant
improvement for the Quarter and the Year. These achievements are a
tribute to the nearly 800 hard-working employees we have across the
United States. We are particularly proud of the Company’s
ability to grow annual sales organically by 6.1% –
to more than a quarter of a billion dollars –
during a year where we cut 25% of our paper catalog circulation and
eliminated approximately 1,000 SKUs from the catalogs. This speaks to
the improved marketing, merchandising, list management and relationship
development strategies that were implemented during the year. In
addition, we held expenses nearly flat year over year, which was a key
factor in driving operating profit growth in Fiscal 2008. We intend to
continue attacking the cost structure of our business as aggressively as
we target sales growth opportunities, producing significant operating
leverage and maximizing the efficiency of our platform.”
Regarding go-forward strategies and Fiscal 2009, Mr. Blumenfeld
commented: “The Company has guided FY09 GAAP
diluted EPS within the range of $0.85 - $0.95 per fully diluted share.
While we acknowledge that no company is immune to the risks associated
with the current macroeconomic environment, we believe Sport Supply
Group will be able to take advantage of potential industry weakness and
gain share from smaller competitors. In times of economic uncertainty
customers tend to gravitate to trusted, value-oriented suppliers, which
is precisely the proposition SSG offers its nearly 100,000 active
customers and base of nearly 400,000 potential customers. We have
launched several new programs – including
enhanced prospecting efforts and the opportunistic recruiting of
seasoned industry salespeople – designed to
accelerate organic growth and take advantage of under-serviced markets
and accounts.
“Additionally, we continue to review a full
pipeline of acquisition candidates and are carefully evaluating
opportunities to expand our geographic footprint and/or stable of
proprietary equipment brands. The company’s
operating platform and capital structure are better positioned than ever
to digest acquisition targets. We will maintain a strict set of criteria
for targets and focus attention on those who can be both accretive to
earnings and a powerful strategic fit as we continue to expand our
presence and reach in this multi billion dollar space.”
The Company will host a conference call to discuss these results at
7:45AM CT / 8:45AM ET today, Wednesday August 27, 2008. The call can be
accessed by dialing 866 383 8008 and using passcode 19765404. A replay
of the call will be available until 9/5/2008 by dialing 888 286 8010 and
using passcode 84585490.
Sport Supply Group, Inc. is the nation's leading marketer, manufacturer
and distributor of sporting goods and branded team uniforms to the
institutional and team sports market. The Company markets via 3 million
direct catalogs, a 40 person telesales team, 160 direct sales
professionals, more than 50 select Platinum Team Dealer Partners and a
family of company-controlled websites.
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 Sport Supply
Group's anticipated financial performance, business prospects,
acquisition opportunities, 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, actions and initiatives by current and potential
competitors, and certain other additional factors described in Sport
Supply Group's filings with the Securities and Exchange Commission.
Other unknown or unpredictable factors also could have material adverse
effects on Sport Supply Group's future results, performance or
achievements. In light of these risks, uncertainties, assumptions and
factors, the forward-looking events or outcomes 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.
Sport Supply Group 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.
SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
Three Months Ended
Twelve Months Ended
June 30,
June 30,
2008
2007
2008
2007
Net Sales
$
61,110
$
56,073
$
251,394
$
236,855
Cost of Sales
39,014
36,782
160,315
153,295
Gross Profit
22,096
19,291
91,079
83,560
Selling, general and administrative expenses
18,051
18,396
71,379
70,870
Operating profit
4,045
895
19,700
12,690
Other Income (Expense):
Interest Income
88
49
290
191
Interest Expense
(951
)
(1,578
)
(4,105
)
(6,002
)
Other Income
47
37
124
146
Total other expense
(816
)
(1,492
)
(3,691
)
(5,665
)
Income before minority interest in income of consolidated
subsidiary and income taxes
3,229
(597
)
16,009
7,025
Income tax provision
1,420
(295
)
6,276
2,634
Minority interest in income of consolidated subsidiary, net of tax
--
--
--
531
Net income
$
1,809
$
(302
)
$
9,733
$
3,860
Weighted average number of shares outstanding:
Basic
12,361,816
10,248,078
12,122,765
10,235,308
Diluted
12,478,174
10,248,078
15,656,672
10,373,907
Net income per share– basic
$
0.15
$
(0.03
)
$
0.80
$
0.38
Net income per share– diluted
$
0.15
$
(0.03
)
$
0.76
$
0.37
Dividends declared per share common stock
$
0.025
$
0.025
$
0.10
$
0.10
SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30,
2008
2007
(In thousands, except share and per
share amounts)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
20,531
$
5,670
Accounts receivable, net of allowance for doubtful accounts of
$1,320 and $1,296, respectively
34,060
31,154
Inventories, net
36,318
32,241
Current portion of deferred income taxes
3,866
3,790
Prepaid income taxes
--
3,208
Prepaid expenses and other current assets
1,203
1,380
Total current assets
95,978
77,443
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $7,576
and $4,986, respectively
9,715
10,678
DEFERRED DEBT ISSUANCE COSTS, net of accumulated amortization of
$2,978 and $2,035, respectively
1,389
2,309
INTANGIBLE ASSETS, net of accumulated amortization of $4,431 and
$3,379, respectively
6,972
8,024
GOODWILL
53,543
54,949
DEFERRED INCOME TAXES
--
3,045
OTHER ASSETS, net
98
144
Total assets
$
167,695
$
156,592
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
$
21,183
$
16,167
Accrued liabilities
11,842
10,318
Dividends payable
309
259
Accrued interest
240
291
Current portion of long-term debt
108
3,608
Income taxes payable
677
--
Deferred tax liability
--
129
Total current liabilities
34,359
30,772
DEFERRED INCOME TAX LIABILITY
4,014
3,898
NOTES PAYABLE AND OTHER LONG-TERM DEBT
50,036
71,386
Total liabilities
88,409
106,056
COMMITMENTS AND CONTINGENCIES
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;
12,465,986 and 10,440,586 shares issued and
12,362,060 and 10,354,560 shares outstanding, respectively
125
104
Additional paid-in capital
64,648
44,276
Retained earnings
15,316
6,813
Treasury stock at cost, 103,926 and 86,026 shares, respectively
(803
)
(657
)
Total stockholders' equity
79,286
50,536
Total liabilities and stockholders' equity
$
167,695
$
156,592
SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30,
2008
2007
2006
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
9,733
$
3,860
$
1,896
Adjustments to reconcile net income to cash provided by (used in)
operating activities:
Provision for uncollectible accounts receivable
1,028
1,099
982
Depreciation and amortization expense
3,738
3,479
3,436
Amortization of deferred debt issuance costs
943
959
683
Loss on disposition of property and equipment
--
--
60
Deferred tax expense
4,362
2,542
1,060
Stock-based compensation expense
494
--
60
Minority interest in consolidated subsidiary
--
531
608
Changes in operating assets and liabilities (net of effects of
acquisitions):
Accounts receivable
(3,934
)
(1,249
)
(2,793
)
Inventories
(4,077
)
4,944
(2,083
)
Prepaid Income taxes and income taxes payable
3,885
(1,601
)
(962
)
Prepaid expenses and other current assets
177
819
(1,248
)
Other assets, net
46
(313
)
(145
)
Accounts payable
5,016
1,365
(1,338
)
Accrued liabilities and accrued interest
1,473
2,452
(388
)
Net cash provided by (used in) operating activities
22,884
18,887
(172
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(1,723
)
(2,980
)
(1,694
)
Cash used in business acquisitions, net of cash acquired of $0, $0
and $864, respectively
--
(24,907
)
(44,395
)
Net cash used in investing activities
(1,723
)
(27,887
)
(46,089
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred debt issuance cost
(23
)
--
--
Proceeds from bank line of credit
1,015
34,935
174,895
Payments on notes payable and line of credit
(25,865
)
(24,435
)
(164,046
)
Cash paid for treasury shares
(145
)
--
--
Payment of dividends
(1,180
)
(1,024
)
(1,020
)
Tax benefit related to the exercise of stock options
378
507
--
Proceeds from issuance of common stock
19,520
608
185
Net cash provided by (used in) financing activities
(6,300
)
10,591
10,014
Net change in cash and cash equivalents
14,861
1,591
(36,247
)
Cash and cash equivalents, beginning of year
5,670
4,079
40,326
Cash and cash equivalents, end of year
$
20,531
$
5,670
$
4,079
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
$
3,181
$
5,041
$
3,795
Cash paid (refunded) for income taxes
$
(1,752
)
$
1,378
$
1,612
SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO EBITDA AND
ADJUSTED EBITDA
(Unaudited, in thousands)
Three Months Ended
June 30,
Fiscal Year Ended
June 30,
2008
2007
2008
2007
Net Income
$
1,809
$
(302
)
$
9,733
$
3,860
Provision for income taxes
1,420
(295
)
6,276
2,634
Minority interest in consolidated subsidiary
--
--
--
531
Interest Expense, net of interest income
863
1,529
3,815
5,811
Depreciation and amortization
940
926
3,738
3,479
EBITDA (a)
5,032
1,858
23,562
16,315
Other expenses:
Stock-based compensation expense
139
--
494
--
Adjusted EBITDA (a)
$
5,171
$
1,858
$
24,056
$
16,315
(a) EBITDA and adjusted EBITDA are non-GAAP financial measures. EBITDA
is defined as net income before interest expense (net of interest
income), income taxes, depreciation and amortization. Adjusted EBITDA is
defined as net income before interest expense (net of interest income),
income taxes, depreciation, amortization, and other items included in
the caption above labeled "Other expenses" which do not directly relate
to the ongoing operations. SSG management relies on EBITDA and adjusted
EBITDA as the primary measures to review and assess operating
performance. SSG believes it is useful to investors to provide
disclosures of its operating results on the same basis that is used by
management. Management and investors also review EBITDA and adjusted
EBITDA to evaluate SSG's overall performance and to compare SSG's
current operating results with corresponding periods and with other
companies. You should not consider EBITDA and adjusted EBITDA in
isolation or as a substitute for net income, operating cash flows or
other cash flow statement data determined in accordance with accounting
principles generally accepted in the United States of America. Because
EBITDA and Adjusted EBITDA are not measures of financial performance
under accounting principles generally accepted in the United States of
America and are susceptible to varying calculations, they may not be
comparable to similarly titled measures of other companies.
SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF CASH FLOW PROVIDED BY (USED IN) OPERATING
ACTIVITIES
TO FREE CASH FLOW FROM OPERATIONS AND FREE CASH FLOW FROM
OPERATIONS PER SHARE
(Unaudited, in thousands)
Fiscal Year Ended June 30,
2008
2007
Net cash provided by operating activities
$
22,884
$
18,887
Adjustments to reconcile net cash provided by operating activities
to free cash flow from operations:
Capital expenditures
(1,723
)
(2,980
)
Free cash flow from operations (b)
$
21,161
$
15,907
Weighted average shares outstanding
12,122,765
10,235,308
Free cash flow from operations per share (b)
$
1.75
$
1.55
(b) Free cash flow from operations and free cash flow from operations
per share are non-GAAP financial measures. Free cash flow from
operations is defined as net cash provided by (used in) operating
activities less capital expenditures. Free cash flow from operations per
share is defined as net cash provided by (used in) operating activities
less capital expenditures, divided by the number of weighted average
shares outstanding. SSG management relies on free cash flow from
operations and free cash flow from operations per share as primary
measures to review and assess liquidity. SSG believes it is useful to
investors to provide disclosures of its operating results on the same
basis that is used by management. Management and investors also review
free cash flow from operations and free cash flow from operations per
share to evaluate SSG’s overall performance
and to compare SSG’s current results with
corresponding periods and with other companies. You should not consider
free cash flow from operations and free cash flow from operations per
share in isolation or as a substitute for net cash provided by (used in)
operating activities or other cash flow statement data determined in
accordance with accounting principles generally accepted in the United
States of America. In addition, free cash flow from operations and free
cash flow from operations per share do not necessarily represent funds
available for discretionary use and are not necessarily measures of SSG’s
ability to fund its cash needs. Because free cash flow from operations
and free cash flow from operations per share are not measures of
financial performance under accounting principles generally accepted in
the United States of America and are susceptible to varying
calculations, they may not be comparable to similarly titled measures of
other companies.