Exhibit 99.1
| | Company Contact: | | Patrick Hamner / Chairman |
| | | | Mike Hessong / Chief Financial Officer |
| | | | (214) 390-1831 |
| | | | |
| | Investor Relations: | | Integrated Corporate Relations, Inc. |
| | | | Joe Teklits / Brendon Frey |
| | | | (203) 682-8200 |
HEELYS, INC. REPORTS FISCAL 2007 FIRST QUARTER FINANCIAL RESULTS
— First Quarter Net Sales Increased 262% to $49.4 million vs. $13.7 million Last Year —
— Company Reports 1Q07 Diluted EPS of $0.30 vs. $0.07 Last Year —
DALLAS, TX (May 7, 2007) — Heelys, Inc. (NASDAQ: HLYS) today reported the following record financial results for the first quarter ended March 31, 2007:
First Quarter Highlights
· Net Sales Increased 262% to $49.4 million versus $13.7 million a year ago
· Net Income Increased 399% to $8.5 million versus $1.7 million a year ago
· Diluted Earnings Per Share Increased to $0.30 versus $0.07 last year
Mike Staffaroni, President and Chief Executive Officer of Heelys, Inc. (the “Company”) commented, “Our positive momentum from last year continued into 2007 which allowed us to exceed both internal and external expectations for the first quarter. We grew our top line by approximately 262%, with strong sell-through across all channels of distribution, and increased earnings per share more than fourfold. We are very pleased with our recent financial performance, as well as our efforts to further heighten our brand recognition and increase our presence at retail.”
For the first quarter ended March 31, 2007, gross profit was $17.5 million, or 35.4% of net sales, compared to $4.9 million, or 36.0% of net sales for the first quarter ended March 31, 2006. Total selling, general and administrative expenses for the first quarter of 2007 were $5.2 million, or 10.6% of net sales, compared to $2.3 million, or 16.9% of net sales in the first quarter of last year. Operating income was $12.2 million, or 24.8% of net sales for the first quarter of 2007 versus operating income of $2.6 million, or 19.1% of net sales in the corresponding period a year ago.
Outlook
For the second quarter of fiscal 2007, the Company currently expects net sales to range from $65 million to $70 million and diluted earnings per share to be between $0.37 and $0.40. When comparing quarterly results in 2007 to quarterly results in 2006, the Company believes that the second and third quarters should be analyzed on a combined basis. For the combined second and third quarters of 2007, the Company currently expects net sales and net income growth of approximately 20-25% over the same combined quarters in 2006. In 2006, the Company estimates that approximately $20 million of net sales shifted from the second quarter to the third quarter due to late shipments as the Company tried to meet the surging demand for its products. In addition, the Company believes some of its customers are placing back-to-school orders for earlier delivery in 2007 than they did in 2006. It should be noted that the Company’s fully diluted outstanding share count is projected to be 28.3 million shares for the full year 2007, compared with 25.1 million for 2006.
“Mr. Staffaroni concluded, “Looking ahead, we are confident that the growing popularity of our brand and products combined with our portfolio of patents affords our Company clear opportunities for the future. While we have grown rapidly over the past 12-months, we believe significant growth prospects still lie ahead. We are committed to leveraging the strength of our brand and our expanding infrastructure to further build our unique position in the marketplace and increase value for our stockholders.”
Conference Call Information
A conference call to discuss first quarter fiscal 2007 financial results is scheduled for today (Monday, May 7, 2007) at 4:30 PM Eastern Time. A webcast of the call will take place simultaneously and can be accessed by
clicking http://investors.heelys.com/index.cfm or www.opencompany.info. To listen to the broadcast, your computer must have Windows Media Player installed. If you do not have Windows Media Player, go to the latter site prior to the call, where you can download the software for free.
About Heelys, Inc.
Heelys, Inc. designs, markets and distributes innovative, action sports-inspired products under the HEELYS® brand targeted to the youth market. The Company’s primary product, HEELYS-wheeled footwear, is patented dual purpose footwear that incorporates a stealth, removable wheel in the heel. HEELYS-wheeled footwear allows the user to seamlessly transition from walking or running to skating by shifting weight to the heel. Users can transform HEELYS-wheeled footwear into street footwear by removing the wheel. HEELYS-wheeled footwear provides users with a unique combination of fun and style that differentiates it from other footwear and wheeled sports products.
Forward Looking Statements
Certain statements in this press release and oral statements made from time to time by representatives of the Company are “forward-looking statements” for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995, including in particular, statements regarding our guidance, outlook for future events, financial performance, customer demand, growth and profitability. In some cases, you can identify forward-looking statements by terminology such as “subject to,” “believes,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “may,” “will,” “should,” “can,” the negatives thereof, variations thereon, similar expressions, or discussions of strategy. All forward-looking statements are based upon management’s current expectations and various assumptions, but they are inherently uncertain, and the Company may not realize its expectations and the underlying assumptions may not prove correct. The Company’s actual results and the timing of events could differ materially from those described in or implied by the forward-looking statements as a result of risks and uncertainties, including, without limitation, the fact that substantially all of the Company’s net sales are generated by one product, the Company may not be able to successfully introduce new product categories, the Company’s intellectual property may not restrict competing products that infringe on its patents from being sold, the Company’s dependence on independent manufacturers, continued changes in fashion trends and consumer preferences and general economic conditions, and additional factors which are detailed in the Company’s filings with the Securities and Exchange Commission, including the Risk Factors contained in the Company’s Annual Report on Form 10-K. Investors, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
HEELYS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(amounts in thousands, except for per share data)
| | Three month period ended | |
| | March 31, | | March 31, | |
| | 2006 | | 2007 | |
| | | | | |
Net sales | | $ | 13,669 | | $ | 49,428 | |
Cost of sales | | 8,749 | | 31,952 | |
Gross profit | | 4,920 | | 17,476 | |
| | | | | |
Selling, general and administrative expenses | | 2,312 | | 5,239 | |
Income from operations | | 2,608 | | 12,237 | |
| | | | | |
Other expense (income), net | | 1 | | (766 | ) |
Income before income taxes | | 2,607 | | 13,003 | |
| | | | | |
Income taxes | | 912 | | 4,552 | |
| | | | | |
Net income | | $ | 1,695 | | $ | 8,451 | |
| | | | | |
Net income per share: | | | | | |
Basic | | $ | 0.12 | | $ | 0.31 | |
Diluted | | $ | 0.07 | | $ | 0.30 | |
| | | | | |
Weighted-average shares: | | | | | |
Basic | | 13,989 | | 27,045 | |
Diluted | | 25,353 | | 28,351 | |
HEELYS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands)
| | December 31, | | March 31, | |
Assets | | 2006 | | 2007 | |
| | | | | |
Current Assets: | | | | | |
Cash and cash equivalents | | $ | 54,184 | | $ | 69,082 | |
Accounts receivable, net of allowances | | 43,256 | | 29,122 | |
Inventories | | 6,057 | | 10,333 | |
Deferred income tax benefits | | 637 | | 695 | |
Prepaid and other current assets | | 962 | | 753 | |
Total current assets | | 105,096 | | 109,985 | |
| | | | | |
Property and Equipment, net of accumulated depreciation | | 393 | | 952 | |
| | | | | |
Patents and Trademarks, net of accumulated amortization | | 478 | | 473 | |
| | | | | |
Deferred Income Tax Benefits | | 371 | | 371 | |
| | | | | |
Total Assets | | $ | 106,338 | | $ | 111,781 | |
| | | | | |
Liabilities and Stockholders’ Equity | | | | | |
| | | | | |
Current Liabilities: | | | | | |
Accounts payable | | $ | 1,304 | | $ | 616 | |
Accrued expenses | | 8,187 | | 3,990 | |
Income taxes payable | | 2,866 | | 4,420 | |
Debt | | 211 | | - | |
Total current liabilities | | 12,568 | | 9,026 | |
| | | | | |
Stockholders’ Equity: | | | | | |
Common stock | | 27 | | 27 | |
Additional paid-in capital | | 59,795 | | 60,329 | |
Retained earnings | | 33,948 | | 42,399 | |
Total stockholders’ equity | | 93,770 | | 102,755 | |
| | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 106,338 | | $ | 111,781 | |
