Aldila, Inc, reported sales dropped 23% to $13.6 million from $17.6 million. The golf company showed a net loss of $523,000, or 10 cents a share, against net income of $1.7 million, or 30 cents, a year ago.
Golf shaft sales declined 17%. The average selling price of its golf shafts decreased by 12% quarter on quarter on a 6% decline in unit sales. Composite materials sales were off 18%. In the 2007 quarter we had $1.1 million of hockey sales, a business line discontinued in 2007.
“We are experiencing a marked slowdown in our sales driven by several factors impacting the golf equipment market,” said Mr. Peter R. Mathewson, chairman and CEO. “Weak retail sales, poor weather, a lack of new product offerings by some of our customers, and the overall weak economic conditions are several factors impacting the golf equipment market. Looking at industry reports, 2008 equipment sales have been weak year to date and are forecasted to remain so through the remainder of the year. Through the first six months of 2008, the golf industry is experiencing a significant decline in sales of metal woods and iron sets. Our sales to several large customers, in particular, continued to be hurt by slowing sales of second selling season OEM programs. These customers have new shaft programs set to begin delivery late in the third quarter of 2008,” Mathewson said.
“Aldila is continuing to enjoy tremendous success on Tour. Players using Aldila shafts have won numerous events on the PGA, Nationwide, Champions and LPGA Tours. Of particular note, Aldila’s newest shaft introduction, the Aldila VooDoo, has been used by players to win the WGC-CA Championship and Verizon Heritage on the PGA Tour, the BMW Asian Open on the European Tour and the South Georgia Classic on the Nationwide Tour. Players testing the Aldila VooDoo continue to give us exciting feedback and we expect usage on Tour of the Aldila VooDoo to continue to grow. Based on our success on Tour, we recently announced that the official launch of the VooDoo will be September of this year. Already, several major manufacturers have indicated they will begin offering the Aldila VooDoo in new club introductions this fall and early 2009,” said Mathewson.
“Our other high performance shaft models also continue to do very well on Tour. The combination of the Aldila DVS®, VS Proto(TM), and NV® continue to be among the most popular shafts on the PGA Tour in woods, and the most popular in hybrid clubs. On the Nationwide Tour, we remain the leading wood and hybrid shafts in play. We are also proud to acknowledge Aldila Staff member, Paula Creamer, on her recent victory at the Jamie Farr Owens Corning Classic on the LPGA Tour. This was her third win this year playing Aldila shafts. She continues to be an outstanding player and spokesperson for Aldila. We are also continuing to see our success on Tour translate to increased play by top amateur golfers as well. Aldila was the most popular wood and hybrid shaft at the NCAA Division 1 Men’s Championship and the leading driver shaft at the NCAA Women’s Championship. We were also the leading shaft in woods and hybrids at the recent U.S. Amateur Public Links Championship and the U.S. Junior Amateur Championship,” Mathewson said.
“We believe our success on Tour and success among the amateur players will fuel demand for Aldila shafts in the market. In the latest edition of the Darrell Consumer Survey, Aldila remained the leading shaft brand in market penetration. Our usage in all woods, fairway woods and hybrid clubs also continues to outpace the competition according to this leading independent survey of golf equipment in use today,” said Mathewson.
“Our Vietnam facility is fully operational and is poised to participate in the production of several of the aforementioned new OEM shaft programs. Our anticipated cost savings associated with our Vietnam factory have not been realized to date as we have been hampered by a slowing of overall unit volume available to shift to the facility,” Mathewson said.
“Composite Materials sales declined by 18% as our customers reduced their requirements due to continued slowing of their businesses. New customers are being developed and when there is an improvement in overall economic activity we expect to get back on track with continuing sales growth,” said Mathewson.
“The company ended the quarter with $8.4 million in cash and cash equivalents after paying $27.3 million in dividend payments to shareholders and repaying $417,000 against its term loan during the six month period ended June 30, 2008,” Mathewson said.