Aldila, Inc. reported second quarter net sales increased 53% to $21.8 million versus $14.3 million in the year-ago period. Net income increased 68% to $3.6 million, or 66 cents per diluted share, compared to $2.2 million, or 42 cents per diluted share, in Q2 2004.
For the six months ended June 30, 2005, net sales increased by $10.1 million to $39.6 million, an increase of 34% over the same period in 2004 and net income increased by $2.5 million to $7.0 million, an increase of 56% over the same period in 2004.
“It is gratifying to report second quarter numbers that beat our strong first quarter results,” said Mr. Peter R. Mathewson, Chairman of the Board and CEO. “Our second quarter sales increased by 53% versus the second quarter of last year. The average selling price of golf shafts increased by 31% quarter on quarter on a 20% increase in unit sales, which increases were driven by the increased sales of branded and co-branded shafts. Driven by continued strong sales of our flagship NV(TM) shaft line our second quarter 2005 branded sales exceeded our branded sales in the second quarter 2004 by 54%. Our net income of $7.0 million for the six months ended June 30, 2005 represents the best first half of the year the Company has had in the past 10 years,” Mr. Mathewson said.
“Gross margin in the 2005 second quarter was affected by a charge for inventory obsolesce of approximately $385,000 as well as higher material costs versus the 2004 second quarter. SG&A spending in the 2005 second quarter was affected by expenses for Sarbanes-Oxley Section 404 Compliance in the amount of $102,000. The Company's backlog of sales orders as of June 30, 2005 of $12.7 million was 183% higher than at June 30, 2004,” Mr. Mathewson said.
“Our results during the quarter and the first half of 2005 demonstrate the appeal and momentum of our NV(TM) Series of shafts in the marketplace. Our performance is validation that our business model built around Aldila branded and co-branded shafts is being embraced by OEMs in a wide range of programs,” Mr. Mathewson said. “We are seeing both an expansion of existing programs with OEMs as they offer a wider range of NV(TM) shafts to their customers as well as the introduction of new club programs. Our NV(TM) Hybrid shaft, bolstered by its success on all Professional Tours, is selling briskly through distribution channels and to OEMs. The new NV(TM) graphite iron shaft, just introduced, is being evaluated by several OEMs and has been selected by one major customer as a custom upgrade option in their line,” said Mr. Mathewson.
The Aldila NV(TM) Series of shafts continues to be one of the most popular shafts in play on the major Professional Tours. The Aldila NV(TM) was used to win both the men's and women's U.S. Open this year. At the British Open the NV(TM) Hybrid was the number one hybrid shaft, continuing its dominance as the leading hybrid shaft on both the PGA and Nationwide Tour. The NV(TM) graphite iron shaft scored its first win at the French Open on the European Tour.
“Outside sales of composite prepreg materials continued to grow during the quarter as sales increased by 69% versus the second quarter of 2004. Sales are up 61% through six months versus the comparable period last year. We are investing in new equipment to further grow this business,” said Mr. Mathewson.
“Our hockey sales have been impacted by the NHL lockout situation but with the recent announcement of a resolution between the owners and the players union we are seeing a rapid increase in activity, which we expect will result in greater sales in the second half of the year,” Mr. Mathewson said.
“Our balance sheet remains strong with $16.7 million in cash and no debt at June 30, 2005. Operations continue to provide strong cash flows accommodating the payment of $6.1 million in dividends in the first half of 2005, which included a $1.00 per share one time special dividend,” said Mr. Mathewson.
ALDILA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED (In thousands, except per share data) Three months ended Six months ended June 30, June 30, 2005 2004 2005 2004 NET SALES $ 21,821 $ 14,260 $ 39,629 $ 29,558 COST OF SALES 13,703 8,281 24,076 17,455 --------- --------- --------- --------- Gross profit 8,118 5,979 15,553 12,103 SELLING, GENERAL AND ADMINISTRATIVE 2,558 2,329 4,880 4,764 --------- --------- --------- --------- Operating income 5,560 3,650 10,673 7,339 OTHER EXPENSE (INCOME): Other, net (167) 18 (239) 15 Equity in earnings of joint venture (56) (39) (124) (138) --------- --------- --------- --------- INCOME BEFORE INCOME TAXES 5,783 3,671 11,036 7,462 PROVISION FOR INCOME TAXES 2,139 1,498 4,083 3,015 --------- --------- --------- --------- NET INCOME $ 3,644 $ 2,173 $ 6,953 $ 4,447 ========= ========= ========= ========= NET INCOME PER COMMON SHARE $ 0.70 $ 0.44 $ 1.34 $ 0.90 ========= ========= ========= ========= NET INCOME PER COMMON SHARE, ASSUMING DILUTION $ 0.66 $ 0.42 $ 1.28 $ 0.87