Performance Sports Group (PSG), the company behind the Bauer and Easton brands, should achieve a sales increase of about 47 percent to $654.0 million for the fiscal year until the end of May, based on preliminary figures. This amounts to a rise of 51 percent in constant currencies, but sales and earnings were increasingly impacted by currency exchange rate changes as the year went by, and they will continue to affect PSG for the first half of the current fiscal year.
The sales rise for the year ended in May was driven by buoyant sales of lacrosse and ice hockey equipment, and the addition of the Easton brand's baseball and softball products. All brands lifted their turnover, despite unfavorable exchange rates for the Canadian dollar and the Swedish krona. Bauer's turnover advanced by 13 percent for the year in constant currencies, raising its share in the global ice hockey market by two percentage points to 56 percent. The company further comprises the Maverik, Cascade, Inaria and Combat brands.
Excluding a gain from a litigation settlement, adjusted net income advanced by about 80 percent in constant currencies for the year. With the negative impact of exchange rate changes and the above gain, adjusted net income should reach about $48.0 million. Actual results are to be released in August.
PSG ended the fiscal year with a strong quarter, with sales set to rise by about 30 percent to $147.0 million. The turnover climbed by about 38 percent in constant currencies, on the back of the Easton acquisition and a 16 percent rise in hockey sales. Excluding the above settlement, adjusted net income for the quarter in constant currencies soared by about 85 percent. Adjusted net income in dollars should land at about $8.0 million.
PSG's growth plan for the current fiscal year and beyond remains unchanged, aiming to leverage its platform to increase its sales faster than the market and its profit faster than sales. It predicts an increase of about two percentage points in gross margin due to the opening of its hockey zone stores and supply chain improvements that should yield $3 million in savings for the year – and more thereafter.
The plans include the launch of the Easton brand into the Japanese baseball market. During an investor call, the company's president and chief executive, Kevin Davis, added that it intended to bid on the NHL license when the deal with Reebok CCM expires after the 2016/2017 season.
The company is most likely to be affected by exchange rate changes for its hockey business, which makes up nearly all of its sales outside the U.S. market. The impact was felt in the third quarter and the company predicted that it would become more important in the last quarter, which normally generates more than twice the level of hockey-related sales. It will be more pronounced in the first quarter of the current fiscal year, when hockey normally makes up more than 35 percent of PSG's sales, compared with about 20 percent in the fourth quarter.
