Despite concerns about the health of the golf business, particularly with Callaways recent revelations, Aldila experienced a breakout quarter in Q2 as net sales jumped 44.4% to $14.3 million versus $9.9 million in the year-ago period. The increase was clearly driven by the golf sector, as golf shaft unit shipment rose 20% and the average selling price per unit increase 21% versus the same quarter last year. The company said its flagship NV wood shaft line “led the way” with a 45% sales increase in the period.
Aldila said that recent NGF data indicate that YTD production of drivers was up 16%, while fairways woods increased 23%, and irons production rose 12% versus H1 2003.
The company said Callaway made up 23% of sales for full year 2003, but gave no percentages for 2004.
Aldila composite prepreg sales jumped 117% versus the year-ago period, but hockey shaft sales fell 33% versus last years second quarter. However, chairman and CEO Peter Mathewson said the hockey business improved during the quarter from a relatively slow first quarter and said the company expects a “further increase in volume” in Q3.
The company said they have seen a “fundamental shift take place” in the global carbon fiber market since 2003, with demand outstripping supply. The shift has resulted in higher carbon fiber prices, forcing Aldila to increase shaft prices for the first time in seven years.
Management said they believe they can operate more effectively than their competitors, due to Carbon Fiber Technology JV, which enable them to manufacture their own carbon fiber product in Wyoming. They said Carbon fiber from the CFT operation enables them to continue expansion of outside prepreg sales. They added a fifth prepreg line to add additional capacity and allow for continued sales growth.
ALDA swung to a profit in Q2, posting net income of $2.2 million, or 42 cents per diluted share, versus a net loss of $471,000, or a 10 cent loss per share, in the year-ago period. Gross margin jumped to 41.9% of sales in Q2 from 15.3% of sales last year.
Backlog at the end of quarter was up 32.3% versus the same period last year.
>>> Hmmm
Raising shaft prices just as Callaway starts to cut prices on its Woods. Do we see a margin crunch at ELY?