An iconic Canadian enterprise with its roots in Kitchener, Ont., in the 1920s, hockey equipment maker Bauer fell into U.S. hands in 1995 when Nike Inc. bought its parent company. Then, in 2008, U.S. private equity firm Kohlberg Sports Group Inc. picked up Bauer from Nike.
Last week, with a $75-million initial public offering on the Toronto Stock Exchange of 33 per cent of the equity of Bauer Performance Sports Ltd., part of the company returned to Canadian hands.
CEO Kevin Davis, who stick-handled three recent acquisitions for Bauer - including companies that produce roller hockey and lacrosse equipment - is leading the charge to keep the company in expansion mode.
Do you see this IPO as a repatriation of a historic Canadian company?
We have amazing Canadian roots. Bauer was founded in 1927 and Canada is part of the fabric of our company. Because we are on a significant growth trajectory, and we have expanded outside hockey and will continue to grow in other sports as well, [the IPO]provides us with consistent access to capital.
Why not go public on a U.S. exchange?
[On the TSX]we are around similar-sized companies, and we are in a marketplace where people understand our company and our products and our sports. It is great when you sit down with people who understand the core part of your business and what drives it … having investors who either play, or have played, or their kids play.
Were you a hockey player as a kid?
I could never really skate well enough to be a real hockey player, but I was a pond player, for sure.
Do most of your employees play?
We have lots of people who play hockey. A few years ago we started a program internally for people who had never played. We now have three different internal leagues, and two of those are for people that never played hockey [until]the last two or three years. [They]really appreciate the skill that athletes have at the highest level, when they get out and start to play for the first time.
What key Bauer operations are in Canada?
Our research, design and development division is in St. Jérôme, Que. Every one of the products we bring to market starts there - and we launch 100 to 150 new products every single season. It is absolutely the hub of our activity.
How about manufacturing?
We manufacture all of our high-end goalie products with a third party located in Canada. We make our elite-level skates for NHL players and other professional athletes in St. Jérôme. Other products are made in Asia.
And head office?
The head office is in New Hampshire. It was part of our Nike legacy. We have 150 dedicated employees there who are working very hard to keep this company going, [so]it would be very hard for us to consider changing where the management of the company is located.
How do you make technological advances in sports equipment?
We do a lot of biomechanical research with McGill University. We take those insights, and combine them with what we take from players. We don't just talk to folks in the NHL, we talk to players of all abilities and ages. And we have a materials group that is second to none. In the skate that we just came out with - the Supreme Total One - the material for the upper came from Formula One race cars. [Our team]is looking at aerospace and things far outside of sporting goods to make sure we find the best materials.
What is your take on head shots and injuries?
Head injuries and concussions are things we have taken very seriously for years. We welcome all of the research that is happening right now around helmet safely. There are some discussions about changing the testing protocols [and]we are going to be a part of those discussions, to make sure we are making the safest helmets possible.
People ask me all the time what is the best helmet on the market. The best helmet is the helmet that fits the best. We have spent a tremendous amount of research and development, not only in the materials we use and the safety of the materials, but also on the fit. We have this thing which allows you to customize the fit without tools, so when you go to a hockey retailer [you can]open the helmet up and fit it perfectly for the person who is using it. If it happens to be for a child, and they grow, you can actually adjust the helmet to make sure you always have a customized fit.
What did the Nike era bring to Bauer?
Nike is a fantastic company, and is run very, very well. Both companies learned from each other. We took away some interesting processes, especially around manufacturing [and]the way you look at expanding into markets. [But]we ran an equipment business, and Nike is a footwear and apparel company. There were a lot of differences. It is hard to be a company of our size inside a company that big, and in the end that's why we separated.
Where is the focus for international expansion?
Eastern Europe and Russia [provide]great opportunities for us. Obviously with the Olympics coming [to Russia]in 2014, the government is investing money in building rinks. The KHL [Kontinental Hockey League]is on in the households of many more people, bringing hockey in there, and those athletes are wearing Bauer and other global brands. There is lots of opportunity in that part of the world, for sure. It has participation growth faster than the industry in total.
How's your entry into lacrosse going?
Lacrosse is the fastest-growth team sport in the United States. It has grown about 10 per cent a year, year after year. Our incredibly strong innovation machine in St. Jérôme is going to be able to bring a lot of performance innovation to that sport. The girls' game is on fire as well. It's a great opportunity for us.
What is the state of roller hockey?
In the places where it is really hot, it continues to have participation growth and we're going to continue to help drive the sport and bring more kids into playing it.
Are more acquisitions a key part of your strategy?
We've done three in three years. We're doing this [IPO listing]and that has taken up a little bit of our time and [kept us]away from [doing more] But I would expect that sort of [acquisition]pace would continue in the future.
What other sports would you like to expand into?
There are lots of performance sports out there that we think could leverage our platform and our innovation. It has to be a sport that requires high-performance equipment. [Target]companies have to be the industry leader or we have to really believe they will be the industry leader.
How important are celebrity endorsements?
It is an important part of our business to make sure that the best players in the world want to use our products. It lends authenticity and credibility to the brand. Almost 70 per cent of the players in the NHL wear our skates, and we have endorsement relationships with some of those guys, because if you want someone to go to a photo shoot or meet some kids, it's only fair that you have an endorsement relationship.
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