True Temper Sports, Inc. announced net sales for the third quarter increased 12.1% to $24.7 million from $22.0 million during the third quarter of 2002. Net income for the third quarter increased to $2.3 million from $1.5 million in the third quarter of 2002.
Adjusted EBITDA for the third quarter increased 24.6% to $8.0 million from $6.4 million in the third quarter of 2002. Net cash provided from operations for the third quarter increased by $2.5 million to $8.4 million from $5.9 million in the third quarter of 2002.
Net sales on a year-to-date basis through September increased 9.2% to $88.8 million from $81.3 million during the same period in 2002. Net income increased to $8.6 million in 2003 from $7.6 million during the first nine months of 2002. Adjusted EBITDA during the first nine months increased by $3.2 million to $27.8 million in 2003 from $24.7 million in 2002. Net cash provided from operations on a year to date basis increased by $2.1 million to $20.4 million in 2003 compared to $18.3 million in 2002.
In his comments about the Company's performance, Scott Hennessy, President and CEO said, “Despite the challenging worldwide economy over the last couple years, we are pleased to report our fifth consecutive quarter of improved sales and operating performance. As a result of our continued market penetration in premium steel golf shafts, and the growth of our performance sports revenues, we have been able to achieve record sales and profits in a sluggish operating environment.
For the twelve month period ending September, 2003, our sales have grown to $114.9 million and Adjusted EBITDA has increased to $35.6 million, while net cash provided by operating activities reached $22.0 million during this period. Our sales momentum has increased on the strength of new premium lightweight steel shaft sales, along with the strong market success of our new Grafalloy Blue(TM) graphite shaft. These two factors, coupled with the continued expansion of performance sports revenues from bicycle components and hockey stick shafts, contributed to our year over year growth. In fact, our performance sports revenues have grown by over 42% during the first nine months of 2003. In addition, we benefited from improved foreign currency exchange rates in all three of the major golf markets outside the United States: Japan, the United Kingdom and Australia. When combined with increased shipments into China to support the expanded club assembly operations in that region, our year-to-date international sales increased by 22.7% when compared to the first nine months of 2002.”
Mr. Hennessy continued, “On a year-to-date basis the gross and operating profit dollars and margins improved compared to the first nine months of 2002. The increase in gross profit was positively impacted by an improved sales mix toward higher margin products, favorable foreign currency exchange rates and leverage on our fixed manufacturing expenses due to volume. This momentum in gross profit was somewhat offset on a year-to-date basis by increased costs for natural gas, employee healthcare costs, and a ratification bonus paid to the hourly employees represented by the United Steelworkers of America related to a new four year collective bargaining agreement effective July 1, 2003.”
In his comments about the Company's outlook, Mr. Hennessy said, “While our long term visibility into the future remains limited, recent incoming orders have been quite strong and indicate a positive outlook going forward. In fact, over the past two months new orders have increased 16% versus the same period a year ago and provide an indication for sustainable revenue growth. Retail sales for the golf equipment industry appear to be rebounding and we believe that we are well positioned to take full advantage of this increase in activity. The Company currently maintains a record level of new products in the pipeline for 2004, is continuing to take market share on the base shaft business and has seen an accelerating momentum in our expanding performance sports business. True Temper expects to maintain its growth pattern during the fourth quarter versus the prior year, and is on track to achieve a record year in earnings and profits for fiscal 2003. Although it is too early to comment on the specific outlook for 2004, we are increasingly optimistic about our ability to generate positive results in the upcoming year.”
TRUE TEMPER SPORTS, INC.
(A wholly owned subsidiary of True Temper Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands)
For the Three For the Nine
Months Ended Months Ended
September September September September
28, 29, 28, 29,
2003 2002 2003 2002
Net sales $24,667 $22,010 $88,759 $81,264
Cost of sales 13,820 13,305 52,772 48,976
GROSS PROFIT 10,847 8,705 35,987 32,288
Selling, general and
administrative expenses 3,704 3,245 11,383 10,477
Business development and
start-up costs 175 37 459 180
Loss on early extinguishment
of long-term debt -- -- -- 20
OPERATING INCOME 6,968 5,423 24,145 21,611
Interest expense, net of
interest income 3,242 2,978 9,893 9,147
Other expenses, net 72 2 118 10
INCOME BEFORE INCOME
TAXES 3,654 2,443 14,134 12,454
Income taxes 1,355 990 5,500 4,884
NET INCOME $2,299 $1,453 $8,634 $7,570
