SOURCE: Aldila, Inc.

April 27, 2005 16:15 ET

Aldila Reports Strong First Quarter 2005 Results

POWAY, CA -- (MARKET WIRE) -- April 27, 2005 -- ALDILA, INC. (NASDAQ: ALDA) announced today net sales of $17.8 million and net income of $3.3 million ($0.61 fully diluted per share) for the three months ended March 31, 2005. In the comparable 2004 first quarter, the Company had net sales of $15.3 million and net income of $2.3 million ($0.46 fully diluted per share).

"We are extremely pleased with the strong results achieved in our first quarter of 2005. Driven by the continuing acceptance of our flagship NV™ wood shaft line by the golfing world, our sales increased by 16% versus the first quarter of last year. Our net income of $3.3 million or $0.61 fully diluted per share represents one of the best quarters the Company has had in the last 10 years. The average selling price of golf shafts increased by 38% quarter on quarter on a 17% decline in unit sales. The decline in units was comprised of lower priced production units. Gross margin in the 2005 first quarter rose to 42% on a 21% increase in gross profit to $7.4 million as compared to 40% and $6.1 million in the first quarter of 2004. The Company's backlog of sales orders as of March 31, 2005 of $12.2 million was 20% higher than at March 31, 2004," said Mr. Peter R. Mathewson, Chairman of the Board and CEO.

"Driven by continued strong sales of our flagship NV™ shaft line our first quarter 2005 branded sales exceeded our branded sales in the first quarter 2004 by 88%. While the majority of our branded sales have been the NV™ wood shaft, our NV™ Hybrid is gaining momentum after leading on the PGA Tour for most of this year as the most played hybrid graphite shaft. Our NVS™ wood shaft with its brilliant orange-bronze paint has been selected in several OEM club programs in the second half of 2005," said Mr. Mathewson.

"The trend towards branded graphite shafts is growing, especially among the top tier premium club companies. One major OEM has essentially given up offering a production shaft in their current wood line. We believe this move to branded graphite shafts for woods is inevitable, as we only have to look at the steel shaft market to see virtually all branded shafts," continued Mr. Mathewson.

"The much-anticipated launch of our NV™ iron shafts is set to take place this June. Rich Beem, playing our NV™ irons in the BellSouth Classic, finished second but was first in greens in regulation for the tournament, hitting over 90% of the greens. Shafts to support the launch of this exciting new product are currently being manufactured in our Poway, California facility," said Mr. Mathewson.

"The Aldila NV™, NVS™, and NV™ ProtoPype continue as leading shafts on the PGA, Nationwide and European Tours. Through March of 2005, Aldila NV™ Series shafts have been used during victories at the Mercedes Championship, World Golf Championship and the Tour Championship. In addition, Aldila has begun testing the new 'Cinnamon Shaft' on Tour with very good success. The NV™ Hybrid and NVS™ Hybrid continue to be the leading hybrid shafts on the PGA and Nationwide Tours," said Mr. Mathewson.

"Composite prepreg sales to third parties increased 51% versus the first quarter last year as interest in our products continues to grow. We are excited about the continual growth in our third party prepreg sales and have committed to support this growing business and be ready to seize opportunities as they appear," Mr. Mathewson said.

"Our hockey business has begun the year on a sluggish note, much as it did last year. We anticipate a ramp up of activity as we progress further into the year," said Mr. Mathewson.

Aldila, Inc. is a leader among manufacturers of graphite golf shafts used in clubs assembled and marketed throughout the world by major golf club companies, component distributors and custom clubmakers. Aldila manufactures and assembles hockey sticks and blades, in addition to the manufacture of composite prepreg material for its golf shaft business and external sales. Aldila also manufactures carbon fiber for internal use through an ownership interest in CFT.

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. Such forward-looking statements include, but are not limited to, implications concerning the acceptance of the NV™ shaft and that its success will continue to attract new customer accounts. 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, 2004, 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. The forward-looking statements in this press release are particularly subject to the risks that:

--  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 product offerings, including the Aldila NV™ shaft and product
    offerings outside the golf industry, will not achieve success with
    consumers or OEM customers;
--  our business with Mission Hockey will not continue to grow;
--  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;
--  CFT will be unsuccessful as a result, for example, of internal
    operational problems, raw material supply problems, changes in demand for
    carbon fiber based products, or difficulties in operating a joint venture;
--  the Company will not be able to acquire adequate supplies of carbon
    fiber, other than that being produced at CFT, at reasonable market prices.
    
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,
                                                      2005        2004
                                                    --------    --------
ASSETS                                             (Unaudited)

CURRENT ASSETS:
      Cash and cash equivalents                     $ 15,123   $ 11,531
      Marketable securities                            2,491      4,971
      Accounts receivable                              8,117      5,214
      Income taxes receivable                              -      1,013
      Inventories                                     10,246      8,292
      Deferred tax assets                              1,570      1,570
      Prepaid expenses and other current assets          412        380
                                                    --------   --------
          Total current assets                        37,959     32,971

PROPERTY, PLANT AND EQUIPMENT                          5,088      5,245

INVESTMENT IN JOINT VENTURE                            3,147      3,072

DEFERRED TAXES                                           634        634

OTHER NON-CURRENT ASSETS                                 132        153
                                                    --------   --------

TOTAL ASSETS                                        $ 46,960   $ 42,075
                                                    ========   ========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
      Accounts payable                              $  5,601   $  4,213
      Income taxes payable                               913          -
      Accrued expenses                                 1,549      2,781
                                                    --------   --------
           Total current liabilities                   8,063      6,994

LONG-TERM LIABILITIES:
      Deferred rent and other long-term liabilities       20         20
                                                    --------   --------
           Total liabilities                           8,083      7,014
                                                    --------   --------

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
       5,188,560  shares in 2005 and 5,127,310
       shares in 2004, respectively                       52         51
      Additional paid-in capital                      44,370     43,864
      Accumulated deficit                             (5,545)    (8,854)
                                                    --------   --------
           Total stockholders' equity                 38,877     35,061
                                                    --------   --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 46,960   $ 42,075
                                                    ========   ========


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

                                                    Three months ended
                                                         March 31,
                                                      2005       2004
                                                    --------   --------

NET SALES                                           $ 17,808   $ 15,298
COST OF SALES                                         10,373      9,174
                                                    --------   --------
          Gross profit                                 7,435      6,124
                                                    --------   --------

SELLING, GENERAL AND ADMINISTRATIVE                    2,322      2,435
                                                    --------   --------
          Operating income                             5,113      3,689
                                                    --------   --------
OTHER EXPENSE (INCOME):
          Other, net                                     (72)        (3)
          Equity in earnings of joint venture            (68)       (99)
                                                    --------   --------

INCOME BEFORE INCOME TAXES                             5,253      3,791
PROVISION FOR INCOME TAXES                             1,944      1,517
                                                    --------   --------

NET INCOME                                          $  3,309   $  2,274
                                                    ========   ========

NET INCOME PER COMMON SHARE                         $   0.64   $   0.47
                                                    ========   ========

NET INCOME PER COMMON SHARE,
 ASSUMING DILUTION                                  $   0.61   $   0.46
                                                    ========   ========

WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING                                    5,142      4,876
                                                    ========   ========

WEIGHTED AVERAGE NUMBER OF COMMON
 AND COMMON EQUIVALENT SHARES                          5,437      4,988
                                                    ========   ========


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

                                                    Three months ended
                                                         March 31,
                                                      2005       2004
                                                    --------   --------

CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                    $  3,309   $  2,274
      Depreciation and amortization                      322        388
      Loss on disposal of fixed assets                     4          4
      Undistributed income of joint venture, net         (75)       (90)
      Changes in working capital items, net           (2,800)     1,345
                                                    --------   --------
         Net cash provided by operating activities       760      3,921
                                                    --------   --------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of property, plant and equipment        (155)       (64)
      Proceeds from sales of marketable securities     2,480          -
      Distribution from joint venture                      -        750
                                                    --------   --------
         Net cash provided by investing activities     2,325        686
                                                    --------   --------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Repurchases of common stock                          -       (236)
      Benefit from exercise of stock options             225          -
      Proceeds from issuance of common stock             282          -
                                                    --------   --------
         Net cash provided by (used for) financing
          activities                                     507       (236)
                                                    --------   --------

NET INCREASE IN CASH AND CASH EQUIVALENTS              3,592      4,371

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD        11,531      6,919
                                                    --------   --------

CASH AND CASH EQUIVALENTS, END OF PERIOD            $ 15,123   $ 11,290
                                                    ========   ========

Contact Information

  • Investor/Media Contacts:
    Robert J. Cierzan
    Vice President, Finance
    (858) 513-1801

    Sylvia J. Castle
    Investor Relations
    Aldila, Inc.
    (858) 513-1801