True Temper Sports, Inc. announced sales for the first quarter increased 21.1%, to $35.8 million from the $29.6 million a year ago. Adjusted EBITDA (defined below) for the first quarter increased 34.8%, to $9.6 million from $7.1 million in the first quarter of 2007. The company's net loss for the quarter narrowed to a net loss of $1.6 million from a net loss of $3.1 million in the first quarter of 2007.
In his comments about the company's performance, Scott Hennessy, President and CEO said, “We are certainly pleased with this very strong start to 2008. The revenue momentum that we built during the second half of 2007 has clearly carried over into the current year, as our first quarter sales were up 21.1% versus the same quarter last year. During the quarter we experienced growth across all of our product categories, with particular strength in our core steel golf shaft business as we supported robust sell-in to the retail channel of exciting new iron and putter launches from our key OEM partners. In addition, our performance sports business continued to deliver dramatic year- over-year growth, up nearly 90% versus the first quarter of 2007. The launch of several new hockey products during this year's first quarter provided a substantial portion of this continued momentum for our overall diversification strategy into a broader base of sporting goods. All of these positive factors helped to contribute to the largest revenue quarter ever achieved in our company's history.”
Hennessy continued, “The strength on our top line is now clearly reading through to significant improvements in our gross profit and EBITDA results. During the first quarter we increased our gross profit percentage to 34.9% from 33.9% achieved during the first quarter of 2007. Overall EBITDA rose to $9.6 million, up 34.8% from the prior year level. This improvement was fueled in part by the strength on the revenue line, and the corresponding leverage on our fixed cost infrastructure. More importantly, though, it was driven by the key cost and productivity initiatives implemented during the later part of 2007 and early 2008. While we have not yet fully reached our operational goals for gross profit levels, we are very encouraged by the progress achieved during the first quarter.”
Outlook
Commenting about the company's outlook for the future, Mr. Hennessy said, “On the golf side of our business, we are encouraged by the strong retail sell-in that has taken place over the past few months. There are a number of compelling new golf club launches now available in the market, and we are optimistic that these will be well received by the golf consumer. At this point in the season, however, it remains unclear how strong the retail sell- through will be for these products and the golf industry overall. While golf has enjoyed a good measure of insulation from the effects of general economic slowdowns in the past, it will apparently be tested again in 2008, as the US economy continues to be challenged. On balance, we remain cautiously optimistic about our golf business for the remainder of the year. In our performance sports category, we continue to see and anticipate significant double-digit revenue improvements for the foreseeable future. Our own new product innovations, along with the strengthening customer relationships we have developed in these non-golf markets, provide a solid platform for continued growth. When we consider our overall business in total, we remain confident that, on a full year basis, 2008 will represent a new sales record for True Temper Sports. (In the near term, we expect our top line sales growth to moderate somewhat in comparison to the second quarter of 2007, as last year's quarter marked the strongest revenue of any second quarter in over five years.)”
Hennessy continued, “From a cost and profitability perspective, we are confident that the improvements delivered during the past six months should continue throughout 2008. Although we are carefully monitoring the recent surge in steel prices, current commodity costs remain generally under control, and the continued operational improvements in our Mississippi manufacturing plant should ensure that we are able to deliver year-over-year growth in our gross margins for the remainder of the year. We maintain very tight controls over SG&A spending, and we anticipate continuing the double-digit percentage improvements to Adjusted EBITDA during the second quarter and beyond.”
