True Temper Sports, Inc. saw net sales increase 14.2% for the second quarter to $37.7 million from the $33.0 million recorded during the second quarter of 2007.  Adjusted EBITDA for the second quarter increased 31.8%, to $10.4 million from $7.9 million in the second quarter of 2007.  The company’s net loss for the 2008 second quarter narrowed to $0.1 million from a loss of $2.3 million last year.


Net sales for the first six months of 2008 have increased 17.5%, to $73.6 million from $62.6 million in the first six months of 2007.  Adjusted EBITDA for the first six months has increased 33.3%, to $20.0 million from $15.0 million in the first six months of 2007. The company reported a net loss of $1.7 million for the first half, improving from a loss of $5.4 million for the year-ago period.

 

In his comments about the company’s performance, Scott Hennessy, President and CEO said, “We are pleased to report that the record revenue that we achieved during the first quarter of this year has now been eclipsed by the second quarter results, which posted the largest sales quarter in our company’s history at $37.7 million.  We had set our expectations quite high in terms of sales growth as we entered 2008, and we are certainly encouraged with the momentum achieved through the first half of the year.  Our growth on the top line continues to be fueled by strong demand for our core products in the premium steel golf shaft category, which are used in every major golf company’s product offerings.  The strength of the True Temper and Project X franchises have been clearly demonstrated during the first six months of 2008, as we have seen sales improvement in both our traditional and new products offered under these two flagship brands.  In addition, we delivered another outstanding quarter of revenue gains in our expanding performance sports business, with second quarter growth of 75% to follow-up the first quarter improvement of 88%.  Our expanding marketshare and product range in the hockey industry has been at the heart of our 2008 revenue improvement in performance sports, as we continue to develop a larger and diversified portfolio of performance based recreational products.  Overall, we were quite pleased to complete the first half of 2008 with total sales growth of nearly 18% versus the first half of the prior year, especially given the generally weak economic backdrop in most domestic consumer goods markets.”

Mr. Hennessy continued, “The second quarter also marked another significant step forward in True Temper’s continuing profitability improvement programs.  Our gross profit percentage of 37% for Q2-08 represented the highest quarterly level in over two years, and by closely managing our SG&A spending and investments we were able to deliver a 32% improvement in second quarter Adjusted EBITDA versus the prior year.  Leverage on increased unit sales, improved manufacturing efficiencies, and reduced affects from commodity inflation all contributed to this overall improvement.  The strong second quarter results brought our 2008 year-to-date Adjusted EBITDA to $20.0 million, or 27% of net sales, as our cost savings and profitability improvement efforts are clearly bearing fruit.”


Outlook 


Commenting about the company’s outlook for the future, Mr. Hennessy said, “While we fully anticipate to experience continued sales gains in our business, we do expect to see some moderation of the growth rate during the second half of 2008, as we compare it to a very strong back half of 2007.  On a year-to-date basis our golf shaft revenue is up 11% versus the first half of 2007.  While the overall golf market has held up quite well in the face of a generally unfavorable economic environment, it is certainly not growing at a double digit pace at retail.  Our new products and marketshare initiatives have enabled us to outpace the market during the first half of 2008, and we expect that growth rate to ease during the third and fourth quarters.  While the golf market in the US has been relatively flat, growth in our international markets in Japan and throughout Asia has remained strong, and we expect that to continue during the second half, offsetting some of the weakness domestically.  Likewise, our performance sports revenue base has expanded significantly during the first half of 2008, far exceeding our goal of 50% annual growth.  We are anticipating continued sales growth in the performance sports category during the second half, but again, at a more modest rate.  Overall, while we remain somewhat more cautious going into the back half of this year, it is certainly clear that 2008 will mark a new annual sales record for True Temper Sports.”


Mr. Hennessy continued, “As we assess our profitability forecast for the remainder of 2008, we continue to see strong improvement in both gross profit and Adjusted EBITDA.  Clearly, the third quarter of 2007 represented an unusually challenging period, and we expect to make significant year-over-year gains during this current third quarter.  In addition, we also anticipate further profitability enhancement during the fourth quarter of the year as our manufacturing productivity initiatives continue to pay dividends.  Looking forward into 2009, we believe that a return to our historical gross profit and Adjusted EBITDA percentages is achievable, through continued emphasis on manufacturing efficiencies, new product growth, pricing and commodities management, and our ongoing dedication to cost containment programs.”