Sales at Aldila, Inc. dipped slightly in the fourth quarter to $17.7 million, but net income soared thanks to gains on its sale of its 50% stake in Carbon Fiber Technology LLC.
The company's aggregate cash and cash equivalents were $29.5 million as of Dec. 31, 2007 after $3.3 million in dividend payments to stockholders, repurchasing $6.7 million in its common stock and spending $6.3 million for capital expenditures. The company repurchased approximately 403,000 shares of its common stock during 2007, which represents approximately 7% of shares outstanding as of Dec. 31, 2006. The company's backlog of sales orders as of Dec. 31, 2007 was $10.2 million versus $12.5 million as of December 31, 2006.
“Sales for the fourth quarter of 2007 were $17.7 million versus sales of $17.9 million in the fourth quarter of 2006,” said Mr. Peter R. Mathewson, chairman and CEO. “Sales of golf shafts were relatively flat and sales of composite materials were 13% higher. There were no sales of hockey products in the current quarter, as we exited that business during the second quarter of 2007, versus approximately $400,000 in hockey product sales during the fourth quarter of 2006.
Consolidated sales of $69.1 million for 2007 were down 4% from 2006. Sales of golf shafts were $57.3 million in 2007 versus $61.4 million in 2006, representing a decline of 7%. Average selling price of shafts fell 3% for the year versus 2006 and overall units declined 4% in 2007. Sales of composite prepreg materials in fiscal 2007 were $10.0 million and represented a 13% increase over last year, Mathewson said.
On Nov. 30, Aldila closed on the sale of its 50% interest in CFT to joint venture partner, SGL Carbon Fiber and Composites, Inc. (“SGL”). The sale price was $17.0 million plus 50% of the working capital as of Nov. 30, 2007, which amounted to $2.5 million.
The proceeds from the sale of CFT and a new $15.0 million credit facility recently put in place with Key Bank will be used to pay a $5.00 special dividend to shareholders on March 10, 2008. Since 2004, Aldila has declared dividends of $46.2 million, repurchased $8.2 million of the Company's common stock and spent $14.3 million for capital expenditures in support of its golf and composite materials businesses.
“The year 2007 was a challenging year for our shaft business,” Mathewson said. “Sales and average selling price were down versus last year. We continued to see a competitive environment across all market segments and we expect that this will continue in the foreseeable future. On a positive note, we have remained profitable every quarter in 2007, extending this run to over four years. Our Vietnam shaft factory is now ready to contribute to our earnings. Our new, wide composite prepreg line is installed and will begin operation shortly and provides us the opportunity to enter new composite prepreg markets.
“During 2007, we moved to simplify our business. We exited our hockey business after five years of effort to build a growing, profitable business. Unfortunately, the volume required to make this an attractive business never materialized. We also made the decision to sell our 50% interest in CFT. This leaves us with two complementary core businesses; graphite golf shafts and composite prepreg materials,” Mr. Mathewson said.
“Our new DVS(TM) shaft will be used in several OEM programs in 2008 and our VS Proto(TM) and NV® family of shafts continue to be used as upgrade options at most major club companies and as popular aftermarket shafts in the distribution market,” said Mr. Mathewson.
“Aldila enjoyed tremendous success on Tour in 2007. Players using Aldila shafts won 19 events on the PGA Tour and nearly 50% of all the events on the Nationwide Tour. The recently introduced DVS(TM), along with the VS Proto(TM) and NV®, continue to be among the leading wood and hybrid shaft series on the PGA and Nationwide Tours. Aldila also won the Grand Slam of Shafts in 2007, as the leading shaft for both woods and hybrids at the four major championships on the PGA Tour in 2007. At the season ending PGA Tour Qualifying School, Aldila shafts were once again the most popular for players in both woods and hybrid shafts. In the recently released Darrell Consumer Survey for 2007, Aldila was the leading shaft choice in total shaft usage for Drivers, Fairway Woods and Hybrid clubs. In fact, the usage of Aldila shafts in hybrids outpaced our nearest competitor by nearly a 4 to 1 margin,” Mr. Mathewson said.
“Our Composite Materials business continued to expand in 2007 with both the fourth quarter and full year sales results up 13%. As we enter 2008, we are optimistic that our decision to expand the capacity and product capability in this business will present sales growth opportunities based on expanding demand in the composite applications,” said Mr. Mathewson.
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS – UNAUDITED
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
——————- ——————-
2007 2006 2007 2006
——— ——– ——— ———
NET SALES $ 17,668 $ 17,874 $ 69,146 $ 72,370
COST OF SALES 14,230 13,558 49,181 48,087
——— ——– ——— ———
Gross profit 3,438 4,316 19,965 24,283
——— ——– ——— ———
SELLING, GENERAL AND ADMINISTRATIVE 2,519 2,813 12,256 10,731
——— ——– ——— ———
Operating income 919 1,503 7,709 13,552
——— ——– ——— ———
OTHER INCOME (EXPENSE):
Interest income 194 183 910 714
Other, net 16,308 (23) 16,312 2,148
Equity in earnings of
joint venture 155 240 435 407
——— ——– ——— ———
INCOME BEFORE INCOME TAXES 17,576 1,903 25,366 16,821
PROVISION FOR INCOME TAXES 6,666 555 9,413 5,585
——— ——– ——— ———
NET INCOME $ 10,910 $ 1,348 $ 15,953 $ 11,236
========= ======== ========= =========
NET INCOME PER COMMON SHARE $ 2.11 $ 0.24 $ 2.94 $ 2.04
========= ======== ========= =========
NET INCOME PER COMMON SHARE,
ASSUMING DILUTION $ 2.09 $ 0.24 $ 2.91 $ 2.01
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