Adams Golf reported record net sales of $96.5 million for the year ended Dec. 31, 2011, as compared to $86.2 million for the year ended Dec. 31, 2010, an increase of 12 percent year-over-year. The company realized a net profit of $14.5 million, or $1.79 per fully diluted share, for the year ended Dec. 31, 2011, up from $5.0 million, or 66 cents per fully diluted share, for the comparable period of 2010.
Results for the year benefited from a $2.7 million adjustment to its deferred tax asset and from a net recovery of $5.1 million which is net of legal fees incurred during 2011, from the settlement of litigation against a former insurance carrier. Excluding these events, net profit would have been $6.7 million, or 82 cents per fully diluted share, for the year ended Dec. 31, 2011.
“With both record revenues and a strong financial performance, 2011 was another highly successful year for Adams Golf. I am delighted with the performance and congratulate the operating team accordingly,” said Barney Adams, chairman and Interim CEO.
“In addition to our financial accomplishments, we believe we have continued to make progress with our brand development and market positions. Evidence of this progress includes:
- According to Golf Datatech LLC, our full year 2011 U.S. iron dollar share in the combined On and Off Course Channels was 10.94%, up 8% year-over-year. Our full year 2011 wood dollar share in the same channels was 5.89%, up 7% year-over-year. These same market shares for irons and woods for the month of January 2012 were 12.2% and 8.3% respectively.
- Our domestic business grew at a healthy 12% for the full year, reflecting both market share and distribution gains. Our total international business grew 11% year over year, driven by a 36% increase in markets outside of Canada and a 2% decline in our Canadian business. We continue to be optimistic about future international growth and have been making investments accordingly.
- On tour, we sustained our position as the # 1 hybrid on the PGA, Nationwide and Champions tours during 2011. Additionally, we received excellent exposure during the year through our association with key staff players such as world ranking # 1 Yani Tseng. PGA Tour winner Aaron Baddeley, and Champions Tour star and all time legendary champion, Tom Watson. Looking forward, we believe we have further strengthened our tour position with recent staff additions such as Kenny Perry. Robert Karlsson, and Caroline Hedwall, among others. We believe these efforts and achievements will help further build our brand strength in the eyes of avid golfers.
We are pleased with the market response to new premium product launches such as the Speedline F12 drivers and fairway woods and Idea a12os irons and hybrids. Our research shows that the Velocity Slot Technology incorporated into our 2012 fairway woods and hybrids increases both ball speed and forgiveness. We believe this technology has the potential to drive significant market share growth in the coming years.
In January 2011, we purchased the intellectual property and select assets of the Yes! branded putter business through a bankruptcy court auction of Denver-based Progear Holdings. We are now in process of re-launching this brand in the U.S. and believe that over the next several years this acquisition will provide us with opportunities for both international and domestic growth in the putter category.
In December 2011, we reached a settlement with a former insurance carrier, thus wrapping up the final chapter in a lawsuit that began in 1999 and, in the process, recovering a net of approximately $6.4 million. This settlement, along with our strong operating performance, allowed us to finish 2011 with cash balance of $18.2 million and no short- or long-term debt.
As of December 31, 2011, our net working capital increased to $48.8 million from $35.9 million at December 31, 2010 and our net assets increased to $62.4 million, or $7.99 per share (calculated as total assets less total liabilities divided by outstanding shares).
Lastly, as per past practice, our product pipeline remains strong with exciting and innovative product launches planned for the balance of 2012 and into 2013.
Looking forward, it is our belief that market conditions are continuing to improve and that we are positioned to sustain our progress on brand and market development. Furthermore, although it is still early in the year, we are off to a strong start for 2012 with field reports of both sell in and sell through at or above expectations. As a result, we remain cautiously optimistic for our business in 2012,” concluded Adams.