Adams Golf reported net sales of $34.1 million for the second quarter, compared to $31.6 million for the year-ago period, an increase of 8 percent year-over-year.  The company posted a net profit of $2.9 million, or 36 cents per fully diluted share, for the three months ended June 30, 2011, as compared to $4.9 million, or 63 cents per fully diluted share, for the comparable period of 2010.

The company said revenues increased for the quarter and for the first half due to market share gains in the U.S., growth in the international business and improved overall market conditions.

Expenses for the quarter and the first half reportedly increased year-over-year due to the “continued strategy of reinvesting back into the business, especially in tour, marketing and R&D.”  The company believes these reinvestments will pave the way for continued long term growth and brand development. Adams also experienced a significant increase in legal expense this year related to an on-going legal dispute with a previous insurance carrier.

The aggregate cash and cash equivalents balance was $3.9 million as of June 30, 2011, and Adams had no outstanding balance on its credit facility with Wells Fargo.

Management said market conditions remain better than a year ago but the rate of improvement slowed during the second quarter. Similar to the economy as a whole, there is a fair amount of uncertainty going into the second half of the year.

Adams said sell through of premium product has continued to be stronger than value products for 2011, and as a result, during Q2 the company chose to proactively further discount certain value products in order to drive sell through and balance field inventories of these products. This discounting, along with higher overall product costs from China, had a slight negative effect on Q2 margins.

“We are pleased with our financial results and brand development during this last quarter and year to date,” said Chip Brewer, CEO and president of Adams Golf.  “When evaluating our financial performance for 2011 as compared to the prior year, we believe the year to date results provide a more accurate picture since the quarterly comparisons were skewed by inventory constraints we faced during the early months of 2010 which shifted that year's revenues excessively into the second quarter. Having said that, irrespective of how you cut the data and based on all metrics we have seen, we continue to outperform both the market in general and the vast majority of our competition. We also remain on track with our long term revenue and brand growth goals.”

“Brand and Operating Highlights include:

  • According to Golf Datatech LLC, our year to date US iron dollar share, in the combined On and Off Course Channels, was 11.0 percent, up 10 percent year over year. Our Q2 iron dollar share in the same channels was 10.5 percent, up 15 percent year over year.
  • According to Golf Datatech, LLC, our year to date US wood dollar share, in the combined On and Off Course Channels, was 6.0 percent, up 13 percent year over year. Our Q2 wood dollar share in the same channels was 5.6 percent, up 20 percent year over year.
  • We continued to strengthen our brand through increased tour exposure and have sustained our position as the # 1 hybrid on the PGA, Nationwide and Champions tours.  
  • We believe we are continuing to make progress with our international growth initiatives. For the first half of 2011 our business outside of North America was $4.2 million, up 46 percent year-over-year.
  • We are pleased with the market response to new premium product introductions such as the Idea pro a12 irons and hybrids, along with our continued sell through success of the Ida Tech V3 product family and the Speedline F11 fairway woods.    For the first half of 2011, our fairway wood and hybrid business was up 59 percent year-over-year. This growth was primarily driven by the addition of Velocity Slot Technology in our fairway wood line. We continue to believe strongly in the value and potential of this technology.
  • Last but not least, our product pipeline remains strong with additional product launches planned for later this year and into 2012. During either late Q3 or early Q4, we expect to begin shipping the replacement product for our Idea a7os line, one of our largest and most important product families. We believe the timing of the shipments will have a significant impact on our second half 2011 quarterly numbers but should not be a relevant factor in determining the long term success of this product line or our company. Most importantly, initial testing and customer feedback on the new line is encouraging.

“In summary, we remain encouraged by our performance over the last several quarters where we believe we have successfully strengthened our brand while reinvesting for the future and delivering positive financial results. We remain dedicated to continuing these trends in pursuit of creating long term shareholder value,” concluded Mr. Brewer.