Adams Golf reported net sales in the second quarter fell 30% to $23.3 million from $33.3 million a year ago. The company had a net loss of $5.2 million, or 78 cents a share, after a $3.6 million, non-recurring, charge to cost of goods sold for the write-down of inventory to the lower of cost or market and the increase to the inventory obsolescence reserve.
In the year-ago period, Adams Golf generated net income of $1.6 million, or 21 cents a share, for the comparable period of 2008.
The company reported net sales of $46.7 million for the six month period ended June 30, 2009, compared to net sales of $61.3 million for the comparable period of 2008, a decrease of 24%. The Company reported a net loss of $4.8 million, or 73 cents per diluted share, for the six month period ended June 30, 2009, compared to net income of $2.4 million, or 32 cents per share, for the comparable period of 2008.
“Q2 was a challenging quarter for our company. Contractions in market demand, the fact that we were between product introductions during the quarter, the non-recurring, non-cash inventory charge, as well as competitive pricing and promotional behavior offered stiff head winds. As a result, our financial performance lagged both our expectations and our track record,” said Chip Brewer, CEO and president of Adams Golf. “On the positive side, I am pleased with our efforts to re-structure our business model in response to market realities and believe we have continued to strengthen both our brand and our market positions.”
Some highlights of the quarter, according to Brewer:
- “According to Golf Datatech, through June our year to date dollar market share in irons and woods were 8.42% and 4.94% respectively. Our woods market share was up 20% year-over-year, which we believe was due to market share gains in drivers and hybrids. Our iron market share was down 5%, which we believe was due to an increase in off-price competitive products and the fact that our Idea a3os product line was at the later stages of its product life cycle. We were relatively pleased with this market
- share performance.
- Our product pipeline remains robust. We recently announced two remarkable products in the Idea a7 irons and hybrids and the Speedline 9032 driver and hybrid-fairway woods. We believe these products provide superior technology and will further strengthen our brand positions. Additionally, we anticipate, and are excited about, further product launches during the second half of this year and into 2010.
- We believe our brand benefited from outstanding tour exposure during 2009, with staff players winning six events year to date and great showings by Chad Campbell at this year's Masters and by Tom Watson at this year's British Open. Furthermore, according to the Darrell Survey, our individual hybrids continue to be the #1 hybrid in play on the PGA, Champions and Nationwide Tours and, according to Golf Datatech, we remain the perceived leader in hybrid technology. We believe that this performance will further strengthen our brand in the marketplace.
- Lastly, we believe our balance sheet and financial position remain strong.”
“Looking forward, we are cautiously optimistic that market conditions will bottom out by year's end; and, that our efforts will deliver long term shareholder value when market conditions improve,” Brewer concluded.
ADAMS GOLF, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net sales $ 23,254 $ 33,260 $ 46,730 $ 61,261
Cost of goods sold 20,476 19,524 34,943 35,414
-------- -------- -------- --------
Gross profit 2,778 13,736 11,787 25,847
Operating expenses:
Research and
development expenses 738 793 1,590 1,879
Selling and marketing
expenses 5,437 9,125 11,387 16,780
General and
administrative
expenses 1,743 2,200 3,586 4,750
-------- -------- -------- --------
Total operating
expenses 7,918 12,118 16,563 23,409
-------- -------- -------- --------
Operating income
(loss) (5,140) 1,618 (4,776) 2,438
-------- -------- -------- --------
Other income (expense):
Interest income
(expense), net (36) (54) (53) (20)
Other income
(expense), net 2 (1) 50 (51)
-------- -------- -------- --------
Income (loss)
before income taxes (5,174) 1,563 (4,779) 2,367
Income tax expense 32 9 61 16
-------- -------- -------- --------
Net income (loss) $ (5,206) $ 1,554 $ (4,840) $ 2,351
======== ======== ======== ========
Net income (loss)
per common share -
basic $ (0.78) $ 0.24 $ (0.73) $ 0.37
======== ======== ======== ========
diluted $ (0.78) $ 0.21 $ (0.73) $ 0.32
