Adams Golf Returns to the Black on 13.2% Revenue Gain

Adams Golf reported sales climbed 13.2% to $19.7 million for the three months ended Sept. 30 from $17.4 million a year ago. Net earnings in the quarter $0.5 million, or 7 cents per share, as compared to a loss of $5.5 million, or 82 cents per share, a year ago.

The year-ago loss included a $5.0 million one time charge to settlement expense resulting from the accrual of the settlement of the class action lawsuit. Excluding this charge, the loss would have been $0.5 million, or 6 cents per share, for the three months ended Sept. 30, 2009.

The company reported net sales of $73.6 million for the nine months as compared to $64.1 million for the comparable period of 2009, an increase of 15% year-over-year. Adams Golf had a net profit of $7.1 million, or 92 cents per fully diluted share, for the nine months as compared to a loss of $10.3 million, or $1.55, a year ago. In addition to the $5.0 million settlement expense incurred during the third quarter of 2009, the 2009 year-to-date net loss also included a one time charge to cost of goods sold of $3.6 million for the write-down of products to the lower of cost or market. Excluding these charges, our net loss for the nine months ended September 30, 2009 was $1.7 million.

As of September 30, 2010, the company's aggregate cash and cash equivalents balance was $10.3 million and there was no outstanding balance on its credit facility with Wells Fargo.

“We are very pleased with our third quarter and year-to-date financial results,” said Chip Brewer, CEO and President of Adams Golf.

“Furthermore, and perhaps most importantly, we continued to make progress on our brand development and market share objectives during the quarter:

    * According to Golf Datatech LLC, our year-to-date U.S. iron dollar share, in the combined On and Off Course Channels, was 9.98%, up 18% year-over-year. Our year-to-date wood dollar share in the same channels was 5.42%, up 7% year-over-year.
    * We continued to strengthen our brand through tour exposure and sustained our position as the # 1 hybrid on the PGA, Nationwide and Champions tours.
    * We are pleased with the market response to new premium product launches such as the Speedline 9064LS drivers and Idea Tech V3 irons. Consistent with the above results, recent brand research shows that our brand strength is continuing to improve, as is purchase interest in our products.
    * As part of our International growth efforts we have begun working with a third party warehouse and logistics center, located in the UK, to serve both UK and Europe. International continues to be a targeted growth area for Adams Golf.
    * Lastly, our product pipeline remains strong with incremental product launches planned for both Q4 of this year and through the first half of 2011.

“Overall market conditions for 2010 are better than 2009; however, the recovery has been muted and there appears to have been further softening in the third quarter. Looking forward, despite the sluggish current conditions, it feels as if market conditions are slowly improving and thus we maintain a cautious optimism that overall economic recovery and improving consumer confidence will bode well for the balance of this year and 2011. Regardless of the timing of any industry recovery, the most important consideration for Adams Golf is profitably driving further brand and market share growth, and we appear to be in good position to accomplish this,” concluded Brewer.