POWAY, CA -- (MARKET WIRE) -- 05/07/08 -- ALDILA, INC. (NASDAQ: ALDA) announced today net
sales of $16.7 million and net income of $458,000 ($0.09 fully diluted per
share) for the three months ended March 31, 2008. In the comparable 2007
first quarter, the Company had net sales of $20.7 million and net income of
$2.7 million ($0.48 fully diluted per share).
Our golf shaft sales declined 18% in the first quarter of 2008 versus the
first quarter of 2007. The average selling price of golf shafts decreased
by 13% quarter on quarter on a 6% decline in unit sales. Composite
materials sales were off 10% in the current quarter versus the 2007
quarter. In the 2007 quarter we had $572,000 of hockey sales, a business
line which we discontinued in 2007. Our gross profit in the 2008 quarter
declined by 37% of which 5% can be attributed to no longer owning 50% of a
carbon fiber plant and the balance due to lower average selling prices for
golf shafts and lower overall sales volumes. Selling, general &
administrative expenses were higher in the current quarter driven by
front-loaded marketing programs, increases in selling expenses, legal cost
of approximately $81,000 related to the establishment of the credit
facility with KeyBank and professional fees of approximately $104,000 in
relation to the restatement of the Company's previously issued financial
statements. The Company's backlog of sales orders of $9.9 million at March
31, 2008 was higher than the $9.5 million reported at March 31, 2007.
"A weakening economy and decreased industry retail sales compared to last
year impacted our sales," said Mr. Peter R. Mathewson, Chairman of the
Board and CEO. "Market participants appear to be taking a cautious
approach to 2008. While we are disappointed with our sales we did remain
profitable and we believe we are well positioned for the back half of the
year. Production for new programs in which we will participate should
begin during the late third quarter and should be in full swing during the
fourth quarter," Mr. Mathewson said.
"It is still too early to gauge consumer acceptance of the new
interchangeable shaft systems in the market place. One major club company
did not ship their retail units to their accounts until late in the
quarter. It will be a least another quarter until we get a good indication
on how successful the early entrants have been in this new market segment,"
Mr. Mathewson said.
"We have made some organizational changes to better support our two
business units of golf shafts and composite materials. Robert J. Cierzan,
who has been serving as our Vice President, Finance / CFO and running our
expanding Composite Materials business, will now devote his full time to
this critical area and will be promoted to Senior Vice President, Composite
Materials. In the last year we have continued to invest in additional
capacity and have hired two key people in sales and resin development. Mr.
Cierzan now has in place an organization that can support and take
advantage of the opportunities we think exist in continuing to grow sales
in our Composite Materials Division. Scott M. Bier, our Vice President,
Controller, will be promoted to Vice President, Finance / CFO. Mr. Bier
has been with the Company since 1998, prior to that he worked at Deloitte.
He has worked in various roles throughout the accounting and finance
department and has assisted Mr. Cierzan in his duties over the last several
years as Mr. Cierzan has gradually spent more and more time growing the
Composite Materials business. Mr. Bier is well qualified to excel in his
new position. These changes will become effective after the Annual Meeting
of Stockholders on May 15, 2008," said Mr. Mathewson.
"Our Vietnam facility continues to ramp up production to meet our targets
for year end. The rising value of China's currency versus the U.S. dollar
and a new labor law that will negatively impact costs increasingly in the
years ahead has made our decision to open a factory in Vietnam all the more
timely. This factory gives us options and helps to mitigate the risks of
China manufacturing," Mr. Mathewson said.
"Our Composite Materials business declined 10% quarter on quarter. This can
be attributed to the timing of customer orders and a general slowdown in
the economy as evidenced by lower shipment volumes to the same customer
base in 2007. This quarter represents the first negative quarterly
comparison since we began focusing on the expansion in this segment of our
business. We believe this to be temporary and our investments made in
terms of capacity and personnel will resume their momentum in this segment
latter in the year when economic factors hopefully improve for our customer
base," said Mr. Mathewson.
"The Company ended the quarter with $7.8 million in cash and cash
equivalents after paying a one-time five dollar special dividend payment to
shareholders totaling $25.8 million during the quarter. The Company placed
in service a $15.0 million dollar credit facility with KeyBank during the
quarter and borrowed $8.0 million against this facility to help support the
dividend payment," Mr. Mathewson said.
"Aldila has enjoyed a great start to the 2008 Tour season. On the PGA
Tour, players using Aldila shafts have won 6 events including the World
Golf Championship - CA Championship and the Verizon Heritage by Aldila
advisory staff member, Boo Weekley. Players using Aldila shafts have also
won 3 events on the Nationwide Tour and 6 events on the Champions Tour. On
the LPGA Tour we have won every event but 2 and Paula Creamer, an Aldila
LPGA staff member, has won twice including last weeks SemGroup
Championship. We are also happy to see our entire high performance line
continue to do well with players winning using our NV®, VS Proto(TM),
DVS(TM), MOI Proto and soon to be released Voodoo shaft. In fact, our new
Voodoo shaft is quickly becoming one of the most popular shafts on Tour and
has already been used to win 4 events since its introduction. We are
tooling up to produce this innovative new shaft concept in the fourth
quarter of this year. We also continue to be the leading hybrid shaft on
the PGA, Nationwide, LPGA and Champions Tours. Most weeks we have more
than twice as many hybrid shafts in play than our nearest competitor," Mr.
Mathewson said.
Aldila will host a conference call at 5 P.M. Eastern Time, on Wednesday,
May 7, 2008, with Peter R. Mathewson, Chairman and CEO, and Robert J.
Cierzan, Chief Financial Officer, to review Aldila's 2008 first quarter
financial results. For telephone access to the conference call dial
800-952-4972 or 416-641-2140 for international calls and request connection
to the Aldila conference call. A live webcast of the conference call can
be accessed on the Aldila website at http://www.aldila.com. An archive of
the webcast will be available through our website for 90 days following the
conference call.
This press release contains forward-looking statements based on our
expectations as of the date of this press release. These statements
necessarily reflect assumptions that we make in evaluating our expectations
as to the future. Forward-looking statements are necessarily subject to
risks and uncertainties. Our actual future performance and results could
differ from that contained in or suggested by these forward-looking
statements as a result of a variety of factors. Our filings with the
Securities and Exchange Commission present a detailed discussion of the
principal risks and uncertainties related to our future operations, in
particular our Annual Report on Form 10-K for the year ended December 31,
2007, under "Business Risks" in Part I, Item 1, and "Management's
Discussion and Analysis of Financial Condition and Results of Operation" in
Part I, Item 7 of the Form 10-K, and reports on Form 10-Q and Form 8-K, all
of which can be obtained at www.sec.gov.
The forward-looking statements in this press release are particularly
subject to the risks that:
-- our NV® and VS Proto(TM) shaft lines and their success may not
continue to attract new customer accounts;
-- our product offerings, including the NV®, VS Proto(TM) and DVS(TM)
shaft lines and product offerings outside the golf industry, will not
achieve or maintain success with consumers or OEM customers;
-- we will not maintain or increase our market share at our principal
customers;
-- demand for clubs manufactured by our principal customers will decline,
thereby affecting their demand for our shafts;
-- the market for graphite shafts will continue to be extremely
competitive, affecting selling prices and profitability;
-- our international operations will be adversely affected by political
instability, currency fluctuations, export/import regulations or other
risks typical of multi-national operations, particularly those in less
developed countries;
-- the Company will not be able to acquire adequate supplies of carbon
fiber at reasonable market prices;
-- acts of terrorism, natural disasters, or disease pandemics interfere
with our manufacturing operations or our ability to ship our finished
products.
For additional information about Aldila, Inc., please go to the Company's
website at www.aldila.com.
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, December 31,
2008 2007
----------- ------------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 7,801 $ 29,529
Accounts receivable 8,281 8,684
Inventories 13,364 13,861
Deferred tax assets 1,542 1,521
Prepaid expenses and other current
assets 471 578
----------- ------------
Total current assets 31,459 54,173
PROPERTY, PLANT AND EQUIPMENT 13,435 13,308
DEFERRED TAXES 750 750
OTHER NON-CURRENT ASSETS 256 257
----------- ------------
TOTAL ASSETS $ 45,900 $ 68,488
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,223 $ 4,758
Dividends payable 773 -
Income taxes payable 130 4,266
Accrued expenses 2,048 2,564
Short term debt 4,000 -
Other current liability 137 137
----------- ------------
Total current liabilities 11,311 11,725
LONG-TERM LIABILITIES:
Deferred rent 169 170
Long term debt 3,833 -
Other long-term liabilities 840 827
----------- ------------
Total liabilities 16,153 12,722
----------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
authorized 5,000,000 shares;
no shares issued - -
Common stock, $.01 par value;
authorized 30,000,000 shares;
issued and outstanding 5,155,347
shares as of March 31, 2008
and 5,154,235 shares as of
December 31, 2007 52 51
Additional paid-in capital 43,774 43,702
(Accumulated deficit) retained earnings (14,079) 12,013
----------- ------------
Total stockholders' equity 29,747 55,766
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 45,900 $ 68,488
=========== ============
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(In thousands, except per share data)
Three months ended
March 31,
------------------------
2008 2007
----------- ------------
NET SALES $ 16,663 $ 20,662
COST OF SALES 12,104 13,472
----------- ------------
Gross profit 4,559 7,190
----------- ------------
SELLING, GENERAL AND ADMINISTRATIVE 4,033 3,372
----------- ------------
Operating income 526 3,818
----------- ------------
OTHER INCOME (EXPENSE):
Interest income 220 199
Interest expense (39) -
Other, net 40 43
Equity in earnings of joint venture - 105
----------- ------------
INCOME BEFORE INCOME TAXES 747 4,165
PROVISION FOR INCOME TAXES 289 1,470
----------- ------------
NET INCOME $ 458 $ 2,695
=========== ============
NET INCOME PER COMMON SHARE $ 0.09 $ 0.49
=========== ============
NET INCOME PER COMMON SHARE, ASSUMING
DILUTION $ 0.09 $ 0.48
=========== ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 5,155 5,525
=========== ============
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES 5,194 5,588
=========== ============
ALDILA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)
Three months ended
March 31,
------------------------
2008 2007
----------- -----------
AS RESTATED
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 458 $ 2,695
Depreciation and amortization 452 376
Stock-based compensation 55 61
Loss on disposal of fixed assets 4 9
Undistributed income of joint venture,
net - (104)
Changes in working capital items, net (4,193) 2,193
----------- -----------
Net cash (used for) provided
by operating activities (3,224) 5,230
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment (594) (2,341)
Proceeds from sales of property, plant
and equipment 16 -
Purchases of marketable securities - (9,200)
Proceeds from sales of marketable
securities - 4,800
----------- -----------
Net cash used for investing
activities (578) (6,741)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from credit facility 8,000 -
Payments on credit facility (167) -
Proceeds from issuance of common stock 18 17
Dividend payments (25,777) -
----------- -----------
Net cash (used for) provided
by financing activities (17,926) 17
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (21,728) (1,494)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 29,529 3,882
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,801 $ 2,388
=========== ===========
Investor/Media Contacts:
Robert J. Cierzan
Vice President, Finance
Sylvia J. Castle
Investor Relations
Aldila, Inc.
(858) 513-1801
