True Temper Sports saw first quarter sales slide 6.6% to $29.6 million from $31.7 million a year ago but, noted that trends were improving.
Gross margins declined to 33.8% from 36.6% and selling, general and administrative costs rose to 13.4% from 11.1%. Net losses grew to $3.1 million from $200,000 a year ago.
“The fact that our top line results were only slightly off from the prior year, and considering that the 6.6 percent decline represented a significant improvement over the quarterly sales shortfall during the third and fourth quarters of 2006, we certainly see these results as trending upward,” said Scott Hennessy, president and CEO.
Hennessy said the increase in the cost of nickel, which is a key ingredient in shaft production, hurt the company's bottom line.
“This commodity has nearly tripled in price during the recent months,” said Hennessy. “In addition, we are continuing to experience the same double digit inflationary pressure for employee medical benefits that many companies are faced with. These two factors account for the majority of the decline in gross margins during the first quarter, but they were somewhat offset by a favorable shift in product mix toward our more premium steel and graphite golf shafts. This shift was anticipated, and represents the results of a strategic emphasis on product mix management during 2007.”
Looking ahead, Hennessy expects year-overyear improvement on the revenue line will begin with in Q2 as new launches kick in, and help profitability for 2007.