Bauer Performance Sports expects strong revenue growth on launch of new line

TORONTO - Bauer Performance Sports Ltd. (TSX:BAU) expects strong revenue growth when it launches a new line of high-performance hockey equipment later this year, even though it expects the Nexus-branded products to be less popular than existing lines.

"We'll expect to see some revenue gains for sure and those revenue gains will largely be targeted toward the fourth quarter when we launch new products," Kevin Davis, Bauer's president and chief executive officer said on a conference call Thursday.

Bauer reported late Wednesday strong sales of its existing lines in its most recent quarter, which helped the company turn last year's second-quarter loss into a US$8.2-million profit this time around.

Shares jumped 5.4 per cent or 35 cents to close at $6.88 Thursday on the Toronto Stock Exchange.

The hockey-focused equipment maker will introduce the Nexus line of skates, sticks and protective gear this spring and has a commitment from Vancouver Canucks star Ryan Kesler to use the equipment. The line — inspired by requests for customization from elite players — is the company's first new family of products since the launch of its Vapor skate in 1997.

Davis said the company is not expecting the new line to be as big as its Supreme and Vapor products, but added the company has already received a significant number of orders and positive feedback from retailers.

Bauer will also introduce the new Re-Akt helmet designed to better protect players' heads against head injuries and the Supreme Totalone goalie pad.

Concussions in hockey have become a growing issue with superstars like Sidney Crobsy out for months due to the injury and many local leagues banning checking over fears of head trauma.

However, the new line won't help sales until it comes to stores in the fourth quarter. Davis expects the current quarter to show weak revenues, as the third quarter usually posts a loss because it is in between seasons.

"We're expecting a whole cadre of really great products coming for the next season," he said.

"In this period we're in right now, it's just, give all your consumers what you need to finish the hockey season and make sure the channel is nice and clean for the new products that are coming in April."

The Toronto-based manufacturer of hockey and lacrosse equipment as well as related apparel reported earnings of $8.2 million or 26 cents per share in the three months ended Nov. 30. That compared with a net loss of US$1.9 million or six cents per share in the comparable year-earlier period.

Revenue soared 27 per cent to US$100.3 million from US$79.2 million, led by a strong performance from the company's newly launched Vapor family of skates and composite sticks and a full line of goalie products.

Revenues from the North American market grew by 29 per cent in the second quarter and 28 per cent in the first half of fiscal 2012 compared to the same periods last year, while sales outside North America grew by 20 and 30 per cent, respectively, the company said in a release.

The company recently signed an endorsement contract with Russian superstar Alex Ovechkin, who joins other National Hockey League stars including Tampa Lightning centre Steve Stamkos, Chicago Blackhawks captain Jonathan Toews in wearing its gear.

The company, which went public in March, has continued to grow market share, revenue and profits since the 2008-2009 recession.

Bauer is best known for its sticks and skates but also makes a full range of gear from pads to helmets to pants.

The company, which lists its shares on the Toronto Stock Exchange but has its head office in New Hampshire, said its market share grew to 49 per cent in 2011 from 45 per cent just a year before.

That makes it the No. 1 player at both the NHL and retail levels against competitors like Reebok-CCM and Warrior.

Bauer, which made an initial public offering last March, was one of the few companies to launch on the Toronto Stock Exchange in 2011 amid extreme market turmoil that made many back away from a decision to go public.