True Temper Sports, Inc. announced net sales for the first quarter increased 7.6% to $31.6 million from $29.4 million during the first quarter of 2002. Net income for the first quarter increased slightly to $2.6 million from $2.4 million in the first quarter of 2002. Adjusted EBITDA for the first quarter increased 8.0% to $8.6 million in 2003 from $8.0 million in 2002. Net cash provided from operations for the first quarter decreased by approximately $1.0 million to $5.7 million from $6.7 million in 2002.
In his comments about the Company’s performance, Scott Hennessy, President and CEO said, “Although international economic and golf industry market conditions remain quite soft, we were pleased to record our third consecutive quarter of improved sales and operating performance. Our first quarter sales increased on the strength of premium grade light weight steel shaft sales and the expansion of performance sports revenues from sales of composite bicycle components, several new hockey stick shafts to hockey OEMs, and other recreational products within the segment. In addition, we benefited from improved foreign currency exchange rates in both Japan and the United Kingdom, which, along with increased shipments into China, generated a 45% increase in our export sales to international markets during the first quarter of 2003.”
Mr. Hennessy continued, “Our operating income increased between quarters on improved gross profit margins, offset by some increased investment in SG&A spending. Gross profit increased as a result of several factors, including, an improved sales mix towards higher margin products, the favorable impact from foreign currency exchange rates in the United Kingdom and Japan, and the favorable leverage on fixed manufacturing costs from increased sales volume. These favorable factors were offset by increased costs for natural gas and employee health care benefits.”
In his comments about the Company’s future performance, Mr. Hennessy said, “The economic and golf industry climate remains sluggish and uncertain. We are hopeful that the recent success in the country’s war on terrorism will ignite consumer confidence and spending patterns, but we are also concerned with the fears over SARS and a late breaking spring season, that the golf industry retail environment may remain relatively soft for the foreseeable future. Although our monthly incoming order trends have generally been positive, we have noticed a decline in the rate of growth that indicates a potential softening to our sales outlook on a comparative year over year basis. That said we are excited about our new product initiatives, such as Grafalloy Blue(TM), and our growing presence in the hockey and bicycle component markets, all of which posted improvements in the first quarter. At this time, with our current run rates, we expect our sales and operating performance in the second quarter of 2003 to approximate our results from the second quarter of 2002.”
TRUE TEMPER SPORTS, INC. (A wholly-owned subsidiary of True Temper Corporation)
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands) For the Three Months Ended March 30, March 31, 2003 2002 Net sales $ 31,601 $ 29,362 Cost of sales 19,753 18,764 GROSS PROFIT 11,848 10,598 Selling, general and administrative expenses 4,074 3,576 Business development and start-up costs 125 -- Loss on early extinguishment of long-term debt -- 20 OPERATING INCOME 7,649 7,002 Interest expense, net of interest income 3,328 3,102 Other expenses, net 5 4 INCOME BEFORE INCOME TAXES 4,316 3,896 Income taxes 1,732 1,520 NET INCOME $ 2,584 $ 2,376