SOURCE: Aldila, Inc.

Aldila, Inc.

August 14, 2012 16:15 ET

Aldila Reports Second Quarter 2012 Financial Results

POWAY, CA--(Marketwire - Aug 14, 2012) -  ALDILA, INC. (OTCQX: ALDA) (PINKSHEETS: ALDA) announced today consolidated net sales and earnings for the three and six month periods ended June 30, 2012.

"Over the last twelve months we have actively been reducing our production levels in our China factory and moving production to our lower cost Vietnam facility. We believe Vietnam provides the Company with a lower cost and high quality finished product. We believe China is no longer a viable location for low cost labor to support the golf industry. This has been building for a number of years with our average cost of labor climbing approximately 18% per year and the U.S. dollar's depreciation versus the Chinese currency has added further pressure to costs in general. We believe our exit from China, targeted to be completed by the end of this year, will be the first in our industry. With our Vietnam factory we already have an ideal location to consolidate our production activities, unlike most of our competitors. While any move of this nature is both costly and a distraction, we felt that it was an appropriate time to undertake this action. This consolidation from two factories to one will better rationalize our costs to our current business," said Mr. Peter R. Mathewson, Chairman and Chief Executive Officer.

Three Month Period Ended June 30, 2012:

  • Net sales of $12.2 million as compared to $12.0 million for the comparable period of 2011.
  • Golf Unit sales down 5% as compared to 2011.
  • Composite Products sales up 4% and Composite Materials sales down 5% as compared to 2011.
  • Net loss of $3.6 million ($0.66 loss per share) as compared to a net loss of $444,000 ($0.08 loss per share) in 2011. 
    • The Net loss in the current year was impacted by an estimated China plant consolidation charge of $2.1 million and a $1.0 million net tax impact of repatriating earnings in 2012.
    • Without the effects of the plant consolidation charge, the pro forma results for 2012 would have been a loss of $435,000 ($0.08 loss per share) versus $444,000 ($0.08 loss per share) in 2011.

Six Month Period Ended June 30, 2012:

  • Net sales of $28.1 million as compared to $23.3 million for the comparable period of 2011.
  • Golf Unit sales up 27% and average selling price of shafts sold down by 2% as compared to 2011.
  • Composite Products sales up 31% and Composite Materials sales down 10% as compared to 2011.
  • Net loss of $4.0 million ($0.74 loss per share) as compared to a net loss of $979,000 ($0.18 loss per share) in 2011. 
    • The Net loss in the current year was impacted by an estimated China plant consolidation charge of $2.1 million and a $1.0 million net tax impact of repatriating earnings in 2012.
    • Without the effects of the plant consolidation charge, the pro forma results for 2012 would have been a loss of $884,000 ($0.16 loss per share) versus $979,000 ($0.18 loss per share) in 2011.

"On Tour we continue to enjoy one of our best years ever. To date, Aldila shafts have been used to win 7 tournaments on the PGA Tour. Our high performance graphite shafts continue to be the most popular shafts on the PGA Tour. Through the Open Championship, Aldila had 37% more wood shafts in play over our nearest competitor. Our newest introductions, the Aldila Phenom® and the NV Magnum™, continue to grow in popularity and are gaining momentum in use in drivers and fairway woods. We are excited with the increasing interest on Tour with our new prototype graphite iron shafts. We had six sets in play at the True South Classic; by far the most popular graphite iron shaft. This new iron shaft incorporates our Tour proven RIP Technology® and patent-pending manufacturing processes. We believe this iron shaft is better than any steel shaft on the market," Mr. Mathewson said.

"Our Composite Materials business continued to experience a general slowdown in sales during the quarter. Sales to Recreational product customers declined 14% while sales to Non-Recreational product customers increased 30% versus the second quarter of 2011. Sales for the first half of 2012 were lower to both Recreational and Non-Recreational product customers resulting in a 7% decline versus the first half of 2011. We are on track to receive ISO 9001 certification by the end of this year and that will open us up to additional material sales and qualification opportunities. We have recently been placed on the Qualified Suppliers List at a potential major customer for high temperature tooling applications," said Mr. Mathewson.

"Our Sales surged during the quarter with Victory Archery, increasing by 64% versus the second quarter of 2011. Sales are up 70% versus the comparable six month period of 2011. We continue to build new relationships with major multi-store retailers and OEM's and expect these new relationships will fuel increased sales in future quarters. Our revolutionary new VAP VooDoo™ cross bow bolt is being very well received by the industry and production is well underway in our Vietnam factory. The third quarter typically experiences the biggest sales driven by hunting season," Mr. Mathewson said.

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 OTC Disclosure and News Service and the Securities and Exchange Commission (for filings prior to our move to OTCQX U.S. Premier) present a detailed discussion of the principal risks and uncertainties related to our future operations, in particular our Annual Report for the year ended December 31, 2011, under "The nature of issuer's business" in Part C, Item VIII, and "Management's Discussion and Analysis or Plan of Operation" in Part C, Item XVI and Quarterly Reports and Current Reports, all of which can be obtained 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®, VS Proto™, DVS®, VooDoo® and RIP® 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 and arrows 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)  
           
  June 30,     December 31,  
  2012     2011  
ASSETS              
               
CURRENT ASSETS:              
  Cash and cash equivalents $ 468     $ 477  
  Accounts receivable   6,165       6,328  
  Inventories   13,957       14,209  
  Deferred tax assets   644       717  
  Prepaid expenses and other current assets   632       655  
    Total current assets   21,866       22,386  
               
PROPERTY, PLANT AND EQUIPMENT   10,589       11,157  
               
DEFERRED TAXES   2,015       1,824  
               
OTHER NON-CURRENT ASSETS   57       57  
               
INTANGIBLE ASSETS   1,081       1,193  
               
GOODWILL   248       248  
               
TOTAL ASSETS $ 35,856     $ 36,865  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
CURRENT LIABILITIES:              
  Accounts payable $ 7,491     $ 6,790  
  Income taxes payable   410       90  
  Accrued expenses   2,386       2,456  
  Accrued plant consolidation   1,687       -  
  Short term debt   3,151       2,800  
  Other current liability   763       758  
    Total current liabilities   15,888       12,894  
               
LONG-TERM LIABILITIES:              
  Deferred rent   93       78  
  Other long-term liabilities   1,648       1,746  
    Total liabilities   17,629       14,718  
               
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 5,388,299 shares as of June 30, 2012 and 5,387,743 as of December 31, 2011   53       53  
  Additional paid-in capital   45,406       45,321  
  Accumulated deficit   (27,232 )     (23,227 )
    Total stockholders' equity   18,227       22,147  
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 35,856     $ 36,865  
               
               
               
ALDILA, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED  
(In thousands, except per share data)  
                       
                       
                       
  Three months ended     Six months ended  
  June 30,     June 30,  
  2012     2011     2012     2011  
                               
                               
NET SALES $ 12,183     $ 12,014     $ 28,083     $ 23,346  
COST OF SALES   9,693       9,586       23,019       18,010  
  Gross profit   2,490       2,428       5,064       5,336  
                               
SELLING, GENERAL AND ADMINISTRATIVE   2,534       2,636       5,181       5,613  
PLANT CONSOLIDATION   2,125       -       2,125       -  
RESEARCH & DEVELOPMENT   701       748       1,380       1,508  
  Operating loss   (2,870 )     (956 )     (3,622 )     (1,785 )
                               
OTHER INCOME (EXPENSE):                              
  Interest income   -       1       -       3  
  Interest expense   (49 )     (2 )     (76 )     (8 )
  Other, net   (42 )     (27 )     (81 )     (37 )
                               
LOSS BEFORE INCOME TAXES   (2,961 )     (984 )     (3,779 )     (1,827 )
PROVISION (BENEFIT) FOR INCOME TAXES   595       (540 )     226       (848 )
                               
NET LOSS $ (3,556 )   $ (444 )   $ (4,005 )   $ (979 )
                               
                               
NET LOSS PER COMMON SHARE $ (0.66 )   $ (0.08 )   $ (0.74 )   $ (0.18 )
                               
NET LOSS PER COMMON SHARE,                              
ASSUMING DILUTION $ (0.66 )   $ (0.08 )   $ (0.74 )   $ (0.18 )
                               
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING   5,388       5,350       5,388       5,350  
                               
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES   5,388       5,350       5,388       5,350  
                               
                               
                               
ALDILA, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED  
(In thousands)  
           
  Six months ended  
  June 30,  
  2012     2011  
               
               
CASH FLOWS FROM OPERATING ACTIVITIES:              
  Net loss $ (4,005 )   $ (979 )
  Depreciation and amortization   1,039       1,032  
  Stock-based compensation   85       76  
  Loss on disposal of fixed assets   23       -  
  Changes in working capital items, net   2,783       (1,408 )
    Net cash used for operating activities   (75 )     (1,279 )
               
CASH FLOWS FROM INVESTING ACTIVITIES:              
  Purchases of property, plant and equipment   (300 )     (548 )
  Purchases of intangible assets   -       (90 )
  Proceeds from sales of property, plant and equipment   15       2  
    Net cash used for investing activities   (285 )     (636 )
               
CASH FLOWS FROM FINANCING ACTIVITIES:              
  Borrowings against line of credit   13,495       737  
  Payments for line of credit   (13,144 )     (1,357 )
  Proceeds from issuance of common stock   -       2  
    Net cash provided by (used for) financing activities   351       (618 )
               
NET DECREASE IN CASH AND CASH EQUIVALENTS   (9 )     (2,533 )
               
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   477       3,400  
               
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 468     $ 867  
               

Contact Information

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