For the second quarter ended June 30, Jarden Corp. reported sales of $2.01 billion, up from $1.98 billion for the same period in 2014. Organically, sales grew by 7.0 percent or $138 million. The company said its results were in line with its expectations.
Jarden's Outdoor Solutions segment, however, saw sales decline by 0.2 percent to $753.3 million in terms of dollars, with foreign exchange losses of $50 million shaving down an organic sales increase of 6.4 percent. The segment generated 15.2 percent lower earnings of $84.9 million. The operating margin fell by two percentage points to 11.3 percent, below the targeted level of 13.5-14.0 percent. Adjusted to include restructuring costs and other special items, operating earnings fell by 18.8 percent to $64.2 million.
The management noted that Coleman performed well, particularly in North America and Europe, but its relatively low margins dragged down the whole segment. Fishing tackle rebounded from the strikes at U.S. West Coast ports, but its more international business was affected by the strong dollar. Marmot and ExOfficio, which is taking over the distribution in Canada, continued to execute on their multi-year expansion plans.
Group managers noted that Jarden's ski production at its new winter sports equipment factory in China is running slightly ahead of expectations. They said that K2 and Völkl will come out with many new products, especially for women, that will make skiing “more enjoyable and less fatiguing.”
Adding its other divisions, the company's net income reached $85.9 million in the quarter, up by 65 percent from $52.1 million in the year-ago period. Adjusted for a variety of special items - including $17.7 million of costs primarily associated with rationalization of manufacturing and distribution facilities and other product related costs - net income was flat at $116 million.
The company's reported gross margin in the second quarter was 30.3 percent, down slightly from 30.5 percent for the same period of 2014. On an adjusted basis, the gross margin improved slightly to 31.0 percent from 30.8 percent.
For the six months ended June 30, Jarden's reported sales were $3.74 billion as compared to $3.71 billion for the same period in 2014. Organic sales grew by 5.9 percent or $220 million. Adjusted net income was $127 million, down from $142 million for the same period in 2014. The adjusted gross margin of 30.4 percent compared with 30.6 percent in the year-ago period.
The company reiterated its confidence in meeting or exceeding its goal of 3-to-5 percent average organic annual growth and double-digit increases in adjusted earnings per share on a currency-neutral basis, but actual earnings per share will increase at a lower rate than expected, in spite of price increases planned for the autumn. The Outdoor Solutions segment is expected to grow by only about 3 percent or a little more than that this year on an organic basis.
Meanwhile, Jarden has completed a secondary public offering of 18.4 million shares at $54.50 apiece, raising net proceeds of $969.0 million. They will be used to fund a portion of the high purchase price negotiated for the acquisition of the Waddington Group, which specializes in cutlery and other consumables. If the takeover is not completed, Jarden will use the funds for general corporate purposes.
