Canadian golf specialty retailer Golf Town saw total sales for the third quarter increase 15.2% to CA$70.2 million ($62.6 mm) from CA$60.9 million ($50.6 mm) in the year-ago period.
In the third quarter Golf Town's gross profit increased from CA$20.1 million ($16.7 mm) in 2005 to CA$23.7 million ($21.1 mm) in 2006, an increase of $3.6 million or 17.9%. As a percentage of sales, gross profit increased to 33.8%, from 33.0% for the same quarter in 2005, attributable to continued higher gross margin rates on club sales as a result of special buys and volume purchasing.
EBITDA increased, from CA$8.5 million ($7.1 mm) in the third quarter of 2005 to CA$9.8 million ($8.7 mm) in 2006, a gain of 15.7%, largely attributable to higher gross profit, which was partially offset by normal SG&A expense increases associated with Golf Town's growth.
Net income before taxes and minority interest for the quarter ended September 30 increased, from CA$7.1 million ($5.9 mm) in 2005 to CA$8.1 million ($7.2 mm) in Q3 2006.
“With four new locations opened this year, golfers recognize that Golf Town offers an unmatched selection of clubs, equipment, apparel, accessories and services through our network of 28 stores in five provinces,” Bebis added.
“At the same time, we have an unwavering commitment to best-of-class operating efficiency. As we have stated since our fall 2004 initial public offering, we are retailers in golf, not golfers in retail, so our top priority is to balance growth with sustainability,” he said.
Continuing growth in Canadian Golf Market
Golf Town's market continues to grow – in participation, rounds played and in spending. According to a recent study(x) by Ipsos Reid for the Royal Canadian Golf Association, Canada's golfing population has increased dramatically in recent years, to almost six million golfers, an increase of more than 20% since the last study in 2001. Even more dramatic is the increase in the number of avid golfers playing eight or more times annually, which has increased by 47.5% since the last study. In addition, the study reports that the market for golf equipment and apparel now totals approximately $3.98 billion annually.
“Our mission is to serve Canadian golfers and be their preferred golf retailer. Our success in that mission is reflected in our strong performance,” Bebis added.
“Looking ahead to 2007, we expect to continue opening new stores at the current pace, primarily in smaller markets, as well as fill-in stores in markets where we have already established a solid presence,” Bebis concluded.
Consolidated Financial Statements Golf Town Income Fund CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT) (UNAUDITED) (in thousands of Canadian dollars, except per unit amounts) For the For the For the For the three three nine nine months months months months ended ended ended ended September September September September 30, 30, 30, 30, 2006 2005 2006 2005 $ $ $ $ ------------------------------------------------------------------------- Sales 70,205 60,891 182,343 159,337 Cost of sales 46,471 40,826 119,360 105,259 ------------------------------------------------------------------------- Gross profit 23,734 20,065 62,983 54,078 Expenses Selling, general and administrative 13,932 11,615 39,672 33,830 ------------------------------------------------------------------------- Income before amortization, interest and taxes 9,802 8,450 23,311 20,248 Amortization of fixed assets 1,026 884 2,911 2,611 Amortization of deferred financing costs 29 26 88 88 Amortization of pre-opening costs 145 59 336 130 Amortization of intangible assets 108 108 323 323 Interest on long-term debt 239 192 672 564 Other interest 190 68 648 360 ------------------------------------------------------------------------- Income before income taxes and minority interest 8,065 7,113 18,333 16,172 Provision for (recovery of) income taxes - current 200 1,355 (956) 2,315 Provision for income taxes - future 1,580 267 3,760 834 ------------------------------------------------------------------------- Income before minority interest 6,285 5,491 15,529 13,023 Minority interest recovery - - - 214 ------------------------------------------------------------------------- Net income for the period 6,285 5,491 15,529 13,237 Retained earnings (deficit), beginning of period 1,277 168 (1,196) (1,318) Distributions declared in the period (3,542) (3,281) (10,313) (9,541) ------------------------------------------------------------------------- Retained earnings, end of period 4,020 2,378 4,020 2,378 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income per trust unit (notes 7 and 8) ------------------------------------------------------------------------- Basic 0.51 0.44 1.25 1.09 Diluted 0.50 0.44 1.24 1.04 ------------------------------------------------------------------------- Weighted average number of units outstanding (in thousands) ------------------------------------------------------------------------- Basic 12,444 12,501 12,444 12,119 Diluted 12,501 12,501 12,501 12,501 ------------------------------------------------------------------------- -------------------------------------------------------------------------
