Training WheelsHuffy has seen some bumps and bruises. Since 1996 its sales have seen steady declines, as have earnings and cash flow. In 1999 the company hit bottom, losing $1.43 per share. Facing a cash crunch, it slashed its dividend and began the painful process of remaking itself. It stopped manufacturing bicycles (it still brands and distributes imports), sold non-core businesses, including its True Temper hardware division, and focused on its core leisure and recreational products.
|Huffy Corp. |
|Market Cap||$101.1 million|
|Average Daily Volume||38,363|
|Company Web Site||www.huffy.com|
|*Based on 2002 estimates Sources: Value Line, company reports, TSC research|
Now Huffy looks poised for steady improvement, especially if an economic recovery helps to push growth in recreational products. Along with its diverse line of wheeled products, the company also has a strong market in athletic equipment such as basketballs, footballs, soccer equipment and basketball game sets. Huffy has also been successful in developing a branded assembly and repair service, which now contributes about 25% of the company's sales. The acquisition of Gen-X should also be a major driver for Huffy's growth. It will bring an entirely new product set to Huffy, including skiing equipment, well-known Gen-X snowboards, in-line skates and hockey products. Gen-X products carry higher price points and margins than traditional Huffy offerings. In addition, the acquisition brings Huffy a new set of customers with cross-selling opportunities. Some modest operational synergies should help reduce the combined company's overhead.