SOURCE: Aldila, Inc.

Aldila, Inc.

March 23, 2011 16:15 ET

Aldila Reports Fourth Quarter and Year End 2010 Financial Results

POWAY, CA--(Marketwire - March 23, 2011) - ALDILA, INC. (OTCQX: ALDA) (PINKSHEETS: ALDA) announced today net sales of $12.0 million and a net loss of $403,000 ($0.08 loss per share) for the three months ending December 31, 2010 as compared to net sales of $14.7 million and net income of $1.0 million ($0.19 income per share) for the comparable period in 2009. For the year ended December 31, 2010, net sales were $54.7 million and net income of $2.3 million ($0.43 income per share) as compared to net sales of $49.8 million and a net loss of $243,000 ($0.05 loss per share) for the year ended December 31, 2009.

"We had a very successful year in 2010 as compared to 2009. Our sales increased in both of our divisions, with our Composite Materials Division experiencing a 56% increase in sales year over year. Although we experienced a successful year in 2010, we began to see a slowing through the third and into the fourth quarter of 2010 in our Composite Products Division. Our sales slowed down in the fourth quarter in our Composite Products Division. Most of the decline in Composite Products Division during the fourth quarter of 2010 was attributed to the OEM production shaft segment, where we experienced a 40% decline versus the fourth quarter last year. This would point to a conservative outlook and inventory adjustment measures on the part of several OEM partners going in to the first quarter of 2011. We expect a weaker than normal first half to this year due to a conservative outlook on the part of the industry and timing of older programs winding down and new programs set to launch after mid-year. Our backlog of $5.5 million as of December 31, 2010 is 48% off from the $10.6 million as of December 31, 2009. The decrease is attributed to sales backlog in the Composite Products Division. The ending backlog for the Composite Materials Division was up 27%," said Mr. Peter R. Mathewson, Chairman of the Board & CEO.

"We have seen a multi-year slide in golf equipment sales industry wide. This decline is approximately 18% below the sales number in 2007. In the key club category of Drivers, the decline is over 20% in units sold versus 2006 and price compression has dragged down the average selling price of Drivers from $236 in 2006 to around $210 in 2010, which continues to put pressure on golf shaft pricing. Fairway, Hybrid and Iron club categories have suffered as well over the last several years and while the macro-economic landscape has improved, the only visible change has been a slowing in the decline of equipment sales. While it appears golf equipment sales have troughed, the return to a more normalized sales level could be slow in coming and require several years to climb back to a healthy level. With no organic growth domestically to offset the impact of an economic downturn, the golf industry will continue to struggle. We believe we can deal with this environment, as we have been through this numerous times before to various degrees. We will win our share of programs based on our brand and innovative shaft technology platforms, superior customer service, long relationships, state of the art factories and our vertical integration. We believe we continue to fare better than most of our competitors," said Mr. Mathewson.

"We continue to enjoy a high profile on the Tour during 2010. Aldila shafts were used to win 15 events on the PGA Tour and 15 events on the Nationwide Tour. Our shafts remained the most popular shafts in play on Tour with more wood shafts and hybrid shafts in play than any other shaft manufacturer. Players using our shafts in their drivers won over $43 million on the PGA Tour during 2010. The PGA Tour's Player of the Year used our Aldila RIP® to win the U.S. Open as well as 3 other events worldwide. Two players on the PGA Tour broke the 60 barrier shooting 59's using Aldila wood shafts. In addition to the Player of the Year, the Comeback Player of the Year and the Rookie of the Year also played Aldila shafts during 2010. In addition to an incredible year on the PGA Tour, Aldila shafts were also the most popular wood and hybrid shafts with PGA Club Professionals during their national championship. Our Tour representatives did an outstanding job during 2010 promoting Aldila and working with the players to maximize the performance of their clubs. Currently they are testing and getting feedback on an experimental Aldila RIP® iron shaft. The RIP® iron surpasses the performance of any previous shaft offered for use in irons, steel or graphite," said Mr. Mathewson.

"We feel professional golf is the ultimate proving ground for new technology and the overwhelming number of Aldila shafts in play on Tour is evidence of our performance advantage over the competition. After successful testing on Tour, we introduced our new Aldila RIP® shaft during 2010 and it was included in many major manufacturer product lines. During 2011, we will be expanding our RIP® Series with the introduction of the RIP® Beta and the RIP® Gamma. While the original RIP® Alpha is a stiff tip shaft that promotes a lower launch, the Beta version incorporates a softer tip for a slightly higher launch and longer carry. The Gamma version has the same launch characteristics of the original Alpha design with a higher balance point for use with heavier heads to achieve a conventional swing weight. The RIP® Beta and Gamma will be included in new product introductions from major club manufacturers during 2011," said Mr. Mathewson.

"Our Aldila engineers have designed and patented multiple golf shaft technologies that provide the foundation for Aldila product innovations for years to come. The Aldila Technology Triad of Micro Laminate®, S-core™ and RIP® Technology are all unique, performance enhancing design technologies that will allow Aldila to continue to be at the forefront of golf shaft performance. Whether used separately or in harmony with one another, each shaft design platform provides players from Tour level to the weekend warrior with the ability to get the most out of their favorite golf clubs," Mr. Mathewson said.

"In our Composite Materials Division our sales increased 56% for 2010 versus 2009, following a classic v-shaped recovery from the decline in sales experienced in 2009. The sales represent the highest ever for the division. We continue to build our organization so we can continue to grow in the years ahead. We have completed a major facelift to the facility to create a very clean interior production environment and one that shows well during customer visits. We are adding new state of the art resin mixing equipment and continue to interview candidates to fill some key positions," said Mr. Mathewson.

"We closed on the Victory Archery acquisition at the end of the year 2010. We have been interested for a number of years in the branded carbon arrow industry because of its potential to offer unique synergies to our business model. The Victory brand is very well regarded and we believe it is positioned for growth. We will be able to apply our world class expertise in high volume production of carbon fiber based tubular structures with our own produced raw materials to this new endeavor. This will be a point of differentiation and competitive advantage. No other arrow brand currently offers total control of the manufacturing experience, producing its own raw material and producing arrows in its own factory. This has been the business model we have used successfully for many years in our market-leading graphite golf shaft business," said Mr. Mathewson.

"We attended the Archery Trade Association Show in Indianapolis on January 6-8th, 2011. We displayed a new trade booth for the show featuring Aldila as the new owner of Victory Archery. We were very pleased with the general industry reception to the positives of Victory joining Aldila and the potential synergies of this combination. We came away with the belief that this will be a good acquisition for Aldila and that we can grow the business and the brand," said Mr. Mathewson.

Aldila will host a conference call at 5 P.M. Eastern Time, on March 23, 2011 with Peter R. Mathewson, Chairman & CEO, Robert J. Cierzan, Sr. Vice President, Composite Materials and Scott M. Bier, Vice President, Chief Financial Officer, to review Aldila's Fourth Quarter and Year End 2010 financial results. For telephone access to the conference call dial 1-888-791-4322 or 1-913-312-1394 for international calls and request connection to the Aldila conference call, Participant Passcode: 3366605. A live webcast of the conference call can be accessed on the Aldila website at 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 and OTC Disclosure and News Service 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, 2009, 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. Our future filings will be included on the OTCQX U.S. Premier website, which can be found at www.otcqx.com.

The forward-looking statements in this press release are particularly
subject to the risks that:
    -- consumer discretionary spending will be flat or decline, which could
       have a material impact on our business;
    -- our product offerings, including the NV(r), VS Proto(tm), DVS(r), VooDoo(r)
       and RIP(r) shaft lines and product offerings outside the golf
       industry, will not achieve or maintain success with consumers or
       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;
    -- demand for composite materials by our principal customers will
       decline or fail to continue to grow;
    -- 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)

                                                  December 31, December 31,
                                                      2010        2009
                                                  -----------  -----------
ASSETS
CURRENT ASSETS:
          Cash and cash equivalents               $     3,400  $     7,104
          Accounts receivable                           6,157        7,535
          Inventories                                  10,779        9,280
          Deferred tax assets                             646          562
          Prepaid expenses and other current assets       604          679
                                                  -----------  -----------
               Total current assets                    21,586       25,160

PROPERTY, PLANT AND EQUIPMENT                          11,748       11,649

DEFERRED TAXES                                          1,737        1,528

OTHER NON-CURRENT ASSETS                                  107          154

INTANGIBLE ASSETS                                       1,311           81

GOODWILL                                                  248            -
                                                  -----------  -----------

TOTAL ASSETS                                      $    36,737  $    38,572
                                                  ===========  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
          Accounts payable                        $     3,839  $     4,141
          Income taxes payable                             62          158
          Accrued expenses                              2,383        2,438
          Short term debt                                 750        1,300
          Other current liabilities                       262          509
                                                  -----------  -----------
               Total current liabilities                7,296        8,546

LONG-TERM LIABILITIES:
          Deferred rent                                   109          111
          Long term debt                                    -        2,167
          Other long-term liabilities                   1,470        1,332
                                                  -----------  -----------
               Total liabilities                        8,875       12,156
                                                  -----------  -----------

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 5,349,863 shares as of
           December 31, 2010 and 5,202,156 shares
           as of December 31, 2009                         53           52
          Additional paid-in capital                   45,159       44,618
          Accumulated deficit                         (17,350)     (18,254)
                                                  -----------  -----------
               Total stockholders' equity              27,862       26,416
                                                  -----------  -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $    36,737  $    38,572
                                                  ===========  ===========




                      ALDILA, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
                  (In thousands, except per share data)


                                    Three months ended  Twelve months ended
                                       December 31,        December 31,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------

NET SALES                           $ 11,966  $ 14,726  $ 54,710  $ 49,774
COST OF SALES                         10,187    10,809    42,254    39,094
                                    --------  --------  --------  --------
          Gross profit                 1,779     3,917    12,456    10,680
                                    --------  --------  --------  --------

SELLING, GENERAL AND ADMINISTRATIVE    2,413     2,536    10,897    10,291
PLANT CONSOLIDATION                        -        54         -       266
                                    --------  --------  --------  --------
          Operating (loss) income       (634)    1,327     1,559       123
                                    --------  --------  --------  --------

OTHER INCOME (EXPENSE):
          Interest income                  3         5         8        17
          Interest expense                (2)      (43)      (34)     (191)
          Other, net                     (22)        5        (9)      (71)
                                    --------  --------  --------  --------

(LOSS) INCOME BEFORE INCOME TAXES       (655)    1,294     1,524      (122)
(BENEFIT) PROVISION FOR INCOME TAXES    (252)      291      (741)      121
                                    --------  --------  --------  --------

NET (LOSS) INCOME                   $   (403) $  1,003  $  2,265  $   (243)
                                    ========  ========  ========  ========

NET (LOSS) INCOME PER COMMON SHARE  $  (0.08) $   0.19  $   0.43  $  (0.05)
                                    ========  ========  ========  ========

NET (LOSS) INCOME PER COMMON SHARE,
 ASSUMING DILUTION                  $  (0.08) $   0.19  $   0.43  $  (0.05)
                                    ========  ========  ========  ========

WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING                    5,247     5,202     5,219     5,184
                                    ========  ========  ========  ========

WEIGHTED AVERAGE NUMBER OF COMMON
 AND COMMON EQUIVALENT SHARES          5,247     5,230     5,251     5,184
                                    ========  ========  ========  ========





                      ALDILA, INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
                              (In thousands)

                                                      Twelve months ended
                                                         December 31,
                                                      --------------------
                                                         2010       2009
                                                      ---------  ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
          Net income (loss)                           $   2,265  $    (243)
          Depreciation and amortization                   1,738      1,771
          Stock-based compensation                          191        399
          Loss on disposal of fixed assets                   18        128
          Changes in working capital items, net            (300)     4,335
                                                      ---------  ---------
                      Net cash provided by operating
                       activities                         3,912      6,390
                                                      ---------  ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
          Purchases of property, plant and equipment     (1,180)      (831)
          Proceeds from sales of property, plant and
           equipment                                         16         88
          Acquisition of Victory Archery                 (2,300)         -
                                                      ---------  ---------
                      Net cash used for investing
                       activities                        (3,464)      (743)
                                                      ---------  ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
          Payments for term loan                         (3,167)    (1,000)
          Borrowings against line of credit                 750      5,100
          Payments for line of credit                      (300)    (8,800)
          Proceeds from issuance of common stock             15          -
          Tax expense associated with cancellation of
           stock options                                   (139)         -
          Dividend payments                              (1,311)         -
                                                      ---------  ---------
                      Net cash used for financing
                       activities                        (4,152)    (4,700)
                                                      ---------  ---------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS     (3,704)       947

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD            7,104      6,157
                                                      ---------  ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD              $   3,400  $   7,104
                                                      =========  =========

Contact Information

  • Investor/Media Contacts:
    Scott M. Bier, Vice President, CFO
    Sylvia J. Castle, Investor Relations
    Aldila, Inc.
    (858) 513-1801