Golf Town saw 2006 sales increase 14.8% to CA$220.1 million ($194.1 mm) from CA$191.7 million ($158.4 mm) last year. The increase was due to the addition of three new stores in 2005 and four new stores in 2006 for a total of 28 as at December 31, 2006 as well comp store sales growth of 2.9%.
“We have delivered very strong results for unitholders, for the year,” said Stephen Bebis, President and Chief Executive Officer. “Looking ahead in 2007, we expect to open five new stores. 2007 should be an exciting year with the introduction of new technology in drivers and woods. The new square shaped drivers from Callaway Golf, Nike and others will help golfers hit the ball straighter.”
Gross profit as a percentage of sales also grew, from 33.8% in 2005 to 35% in 2006 due to better buying terms from our suppliers and lower inventory shrinkage expense compared to 2005.
EBITDA increased 22.2%, from CA$20.3 million ($16.8 mm) in 2005 to CA$24.8 million ($21.9 mm) in 2006, and earnings increased 24.0% from CA$12.9 million ($10.7 mm) to CA$16.0 million ($14.1 mm) in 2006.
Net income for the year – before taxes and minority interest – increased, from CA$14.8 million ($12.2 mm) in 2005, to CA$18 million ($15.9 mm) in 2006, an increase of 21.6%.
Golf Town total sales for the fourth quarter ended December 31, 2006 advanced 16.4% from CA$32.4 million ($27.6 mm) in 2005 to CA$37.7 million ($33.1 mm) in 2006. As a percentage of sales, gross profit rose from 33% in the fourth quarter of 2005 to 37.6% in the quarter ended December 31, 2006.
In addition to advances in revenues and gross profit, Golf Town's EBITDA also increased from CA$0.1 million ($0.1 mm) in the same quarter last year to CA$1.5 million ($1.3 mm) in the fourth quarter ending December 31, 2006. Strong advances in EBITDA occurred as a result of higher gross margins on product; particularly on golf clubs.
“Golf Town's consistently strong performance since the public offering in the fall of 2004 has enabled the Trustees to implement three increases to unitholder distributions in 2006 alone, most recently for the month of November 2006,” added Bebis. “Even so, on the basis of the trailing 12 months, Golf Town's payout ratio was 66.6 per cent or $1.20 per unit annualized, which we believe is conservative.”
“Golf in Canada is a big business,” added Bebis “and Golf Town is uniquely positioned to serve this market and uniquely positioned to benefit from it. There is a great deal of growth available to us.”
Bebis also commented, “Our mission is to serve golfers and capture their investment in the game. As our 2006 results demonstrate, we continue to be successful in this mission. As we have stated since our fall 2004 initial public offering, our top priority is to balance growth with sustainability. We are doing so.”
Consolidated Financial Statements
Golf Town Income Fund
CONSOLIDATED STATEMENTS OF
INCOME AND RETAINED EARNINGS (DEFICIT)
(in thousands of Canadian dollars, except per unit amounts)
For the year ended December 31, 2006 2005
$ $
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Sales 220,099 191,725
Cost of sales 142,916 126,940
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Gross profit 77,183 64,785
Expenses
Selling, general and administrative 52,396 44,477
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Income before amortization, interest and taxes 24,787 20,308
Amortization of fixed assets 3,917 3,510
Amortization of deferred financing costs 117 117
Amortization of pre-opening costs 488 197
Amortization of intangible assets 431 431
Interest on long-term debt 910 766
Other interest 917 518
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Income before income taxes and minority interest 18,007 14,769
Provision for (recovery of) income taxes -
current (note 11) (956) 1,107
Provision for income taxes - future (note 11) 2,911 931
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Income before minority interest 16,052 12,731
Minority interest recovery - (214)
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Net income for the year 16,052 12,945
Deficit, beginning of year (1,196) (1,318)
Distributions declared in the year (note 10) (14,011) (12,823)
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Retained earnings (deficit), end of year 845 (1,196)
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Net income per trust unit
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Basic (note 12) 1.29 1.06
Diluted (note 12) 1.28 1.02
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Weighted average number of units
outstanding (in thousands)
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Basic 12,453 12,215
Diluted 12,501 12,501
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