Aldila, Inc. reported net sales increased 45.2% to $18.0 million for the fourth quarter compared to $12.4 million in the same quarter of 2004. The company reported net income of $2.7 million (48 cents per diluted share) for the fourth quarter of 2005 as compared to net income of $1.6 million (29 cents per diluted share) in the same quarter of 2004.
For the year ended December 31, 2005 net sales were $77.0 million as compared to $52.8 million for the year ended December 31, 2004. The company had record net income of $13.4 million ($2.46 earnings per share-fully diluted) for 2005 as compared to net income of $9.3 million ($1.77 earnings per share-fully diluted) in 2004.
In 2004, the company realized tax benefits associated with its deferred tax assets and the change in its valuation allowance. Excluding such tax benefits, the company's net income for 2004 would have been $7.1 million ($1.35 earnings per share-fully diluted).
The company's aggregate cash and cash equivalents was $15.8 million as of December 31, 2005 after payments of $13.1 million in dividends to stockholders in the 2005 fiscal year. The company paid 45 cents per share in quarterly dividends and $2.00 per share in special dividends during the year.
The company's backlog of sales orders as of December 31, 2005 was $11.4 million versus $9.9 million as of December 31, 2004.
“For the fourth quarter of 2005 we continued to see strong demand for our products as our revenues grew by 45% versus the fourth quarter of 2004,” said Mr. Peter Mathewson, Chairman and Chief Executive Officer. “Our branded shaft revenues grew by 76% versus the fourth quarter of 2004. The increase in branded product resulted in a change of product mix, which had the effect of increasing our average shaft selling prices. Our average shaft selling price increased 36% versus the fourth quarter of 2004 on a 7% increase in units sold. Our gross margin improved to 34% in the fourth quarter 2005 from 27% in the comparable quarter in 2004. Our fully diluted earnings per share increased by 66% to $0.48 per share compared to $0.29 per share in the fourth quarter of 2004. During the quarter we had an inventory obsolescence charge of $247,000 and a Sarbanes Oxley Section 404 Compliance expense of $266,000,” said Mr. Mathewson.
“For the year 2005 our revenues of $77.0 million grew 46% versus the $52.8 million reported for the year 2004. For the fiscal year 2005 our branded shaft revenues grew by 73% versus those reported for the 2004 year. The increase in branded product resulted in a change of product mix, which had the effect of increasing our average shaft selling prices. Our average shaft selling prices were 33% higher versus the 2004 year on a 13% increase in units shipped. Our gross margin improved to 38% in 2005 versus 34% in 2004. Our net income of $13.4 million in 2005 was higher than any year in the Company's history and 44% higher than in 2004. Our fully diluted earnings per share grew 39% to $2.46 per share from $1.77 per share for year 2004,” Mr. Mathewson said.
“The positive trends we have been reporting during 2005 continued during the fourth quarter of 2005. Our premium NV(TM) Series of shafts is one of the most popular in the market place today. Due to its broad popularity we continue to expand the family with the addition of the brilliant pink NV(TM) wood shaft being played by one of the new stars on the LPGA Tour, Paula Creamer, who has been added to the Aldila Advisory Staff of players. Paula, with four wins in her rookie 2005 year and her stellar play in the Solheim Cup, has made her a highly visible player on the LPGA Tour and the use of the distinctive pink NV(TM) shafts in her driver and 3 wood has created a popular new line extension. Several OEMs have added this shaft to their custom offerings and Distribution sales are increasing as well,” said Mr. Mathewson.
“In the spring of 2006, Aldila will begin shipments of our two newest shaft offerings — the NV ProtoPype(TM) and the VS Proto(TM). The VS Proto(TM) has quickly become Aldila's single most popular shaft model on Tour. Both are high-end, high performance shafts featuring carbon nanotubes as well as aerospace carbon fibers and Aldila's exclusive high performance resin system. In addition, we unveiled the new VS Proto(TM) Hybrid shaft for high-end hybrid clubs and a new Gamer(TM) wood and iron shaft to match the Gamer(TM) Hybrid shaft introduced last year,” said Mr. Mathewson.
“The move by first and second tier club companies to branded and co-branded shafts in their driver, fairway and hybrid club models continues and is expected to become the norm for new models going forward. Branded and co-branded sales for the year ended December 31, 2005 increased by 73% and 1,387%, respectively, as compared to the same period in 2004. The Hybrid club market continues to expand with many new offerings being sold as individual clubs and innovative sets of irons featuring multiple hybrid clubs, which are mostly graphite shafted, replacing the traditionally steel shafted long irons in the set. We expect this positive trend to continue to expand for the foreseeable future,” Mr. Mathewson said.
“On the Professional Tours we are pleased with the acceptance of our high performance golf shafts with growing numbers being played weekly on the PGA and Nationwide Tours. 2005 proved to be one of the most successful years on Tour for Aldila. Players using Aldila shafts recorded 13 wins on the PGA Tour and 10 on the Nationwide Tour. At the PGA Tour qualifying tournament, which was at the end of the year, Aldila was the most popular shaft in both woods and hybrids and was used by the winner of that tournament. The season start of 2006 has been outstanding for Aldila with wins at the Mercedes Championship and back-to-back wins at the recent FBR Open and the AT&T Pebble Beach National Pro-Am,” said Mr. Mathewson.
“Our third party sales of composite prepreg materials continued to track upward with an increase of 94% in the fourth quarter of 2005 versus the fourth quarter of 2004 and increased 67% year on year. Our investment in capital equipment to support and build on this growth is an ongoing affair, with our new resin filmer soon to come on line and the very recent decision to place on order our sixth prepreg tape line to ensure operation during this fiscal year,” said Mr. Mathewson.
“Carbon Fiber Technology LLC (“CFT”), our joint venture carbon fiber plant, is operating relatively smoothly after struggling with obstacles associated with ramping up the facility in 2005. We are looking for an increased amount of production to feed our growing businesses in 2006. The shortage of carbon fiber in the world markets today is real and appears to be long term. We are fortunate to be a producer of carbon fiber and look upon CFT as a valuable strategic asset,” Mr. Mathewson said.
“Our hockey business was down 17% in the fourth quarter 2005 versus same quarter in 2004. Sales for the year were down 43% due to the severe impact of the NHL lockout. We continue to believe a much improved performance will materialize in 2006, however, we do not expect it to be material to our overall results,” said Mr. Mathewson.
