Adams Golf, Inc. posted strong sales increases to finish out the year, but not strong enough to counteract a sales decrease that was carried through the first nine months of the year. Despite the slight sales increase for the year, the company managed to turn operating efficiencies into a net income increase for the year and to slim the net loss common to the golf industry in the fourth quarter.

For the fourth quarter, Adams Golf reported a 16.0% increase in total net sales to $9.7 million from $8.3 million for the same quarter last year. Gross margin declined 200 basis points as a percentage of net sales, however, to 42.3% from 44.5% last year. Though the company was unable to post a net gain for the quarter, it did manage to slim the loss to $1.0 million, or four cents per diluted share, versus a loss of $1.6 million, or a loss of 6 cents per share, in the same quarter last year.

Adams attributed the dip in sales for the year to decreased sales of maturing product lines coupled with a decrease in fairway woods revenue, partially offset by successful product introductions of the Idea A2 and A2 OS Irons and the RPM Dual series of drivers. A large portion of the driver sales for the year was generated by the Redline RPM and RPM Dual product lines, which were introduced in fourth quarter of 2004 and second quarter of 2005, respectively, and Ovation drivers, which were introduced in Q1 2005. This was offset by a decrease in maturing product line sales specifically the Redline product family and Tight Lies GT driver product family.

Adams Golf, Inc.
Full Year Results
(in $ mm) 2005 2004 Change
Total Sales $56.4  $56.8  -0.6%
U.S. Sales $48.5  $50.3  -3.6%
International $7.9  $6.5  +22.7%
Drivers $15.7  $11.1  +40.7%
Irons $23.9  $21.1  +13.3%
Fairway  $14.5  $21.6  -32.8%
Wedges  $2.3  $2.9  -20.5%
GM % 46.3% 49.6% -200 bps
Net Income $3.2  $3.1  +5.3%
Diluted EPS 12¢ 12¢ flat
Inventory* $16.2  $11.6  +39.7%
Accts Rec* $14.2  $9.3  +52.1%
*At Year-End