Adams Golf reported that net sales declined 16.2% to $23.5 million in the first quarter from $28.0 million for the year-ago period. The company had net income of $0.4 million, or 5 cents per fully diluted share, for the first quarter 2009, as compared to net income of $0.8 million, or 11 cents per fully diluted share, for the comparable period of 2008.
We remain encouraged with our market positions, brand strength and technology platforms. According to Golf Datatech, during the first quarter of 2009 our U.S. woods dollar market share was 5.8%, an increase of 37.8% over the same period in 2008, and our U.S. irons dollar market share was 8.9%, a decrease of 4.5% over the same period in 2008. We believe we gained share in the woods category due to market share gains in drivers and hybrids. We believe we ceded share in the irons category due to both price competition and the fact that our Idea a3os product is in the second year of its life cycle. Additionally, according to the Darrell Survey, our individual hybrids continue to be the #1 hybrid in play on the PGA, Champions and Nationwide Tours during 2009 and, according to Golf Datatech, we remain the perceived leader in hybrid technology. Furthermore, we remain the industry market share leader in hybrid iron sets and, with the launch of the patent pending aerodynamic technology inherent in our Speedline drivers, we believe we have a technology platform that offers us long-term opportunities in the driver category.
“Looking forward, we have recently begun to see some encouraging signs that we believe may signal a bottoming out in demand contraction during Q2 and Q3 with potential for improved conditions by year end. Still, we expect Q2 and Q3 to remain extremely difficult operating environments due to both continued year over year market contractions as well as marked increases in discounting and promotional activity by competitors. In response, we have taken further steps to reduce our overall expenses with a dual agenda of maintaining our brand momentum while maintaining our financial position in the face of extreme market conditions. These cost reduction efforts have now lowered our annualized fixed costs by approximately 21%. We are optimistic that our efforts will deliver long term shareholder value when market conditions improve,'' Mr. Brewer concluded.
ADAMS GOLF, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
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2009 2008
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Net sales $ 23,475 $ 28,001
Cost of goods sold 14,467 15,890
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Gross profit 9,008 12,111
Operating expenses:
Research and development expenses 853 1,086
Selling and marketing expenses 5,951 7,655
General and administrative expenses 1,841 2,550
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Total operating expenses 8,645 11,291
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Operating income 363 820
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Other income (expense):
Interest income (expense), net (16) 34
Other income (expense), net 47 (50)
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Income before income taxes 394 804
Income tax expense 28 6
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Net income $ 366 $ 798
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Net income per common share - basic $ 0.06 $ 0.13
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- diluted $ 0.05 $ 0.11
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