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Adams Golf Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: March 8, 2011 05:21PM
Adams Golf Inc. (ADGF) filed Annual Report for the period ended 2010-12-31. Adams Golf Inc. has a market cap of $44.9 million; its shares were traded at around $6.01 with a P/E ratio of 9.5 and P/S ratio of 0.6.
Highlight of Business Operations:
We have put into place a purchasing procedure that strives to negotiate effective terms with various vendors while continuing to ensure the quality of our components. We are frequently re-evaluating existing vendors and testing potential new vendors for the various product lines we offer. At any time, we may purchase a substantial majority of our volume of a specific component part from a single vendor, but we strive to maintain primary and secondary suppliers for each component part. Substantially all of our iron, fairway wood, driver, hybrids, wedge and putter component parts are manufactured in China, and a significant portion of our inventory purchases are from one supplier in China. We purchased approximately 27% and 45% of our total inventory purchased for the years ended December 31, 2010 and 2009, respectively, from this one Chinese supplier.
Sales to Retailers - We sell a majority of our products to selected retailers. We believe our selective retail distribution strategy helps our retailers maintain profitable margins and maximize sales of our products. For the years ended December 31, 2010, 2009 and 2008, sales to U.S. specialty retailers, mass merchants, sporting goods retailers, and on course accounts accounted for approximately 81%, 80% and 80%, respectively, of our total net sales. As products mature, they may be sold to alternative channels of distribution, which are not in direct competition with selected retailers for premier product lines.
International Sales - International sales are made primarily in Canada, Europe, South Africa, Japan and other Asian regions. International sales in Canada are made through an agency relationship, while sales to other countries throughout the world are made through a network of approximately 36 independent distributors. For the years ended December 31, 2010, 2009 and 2008, international sales accounted for approximately 19%, 20% and 20%, respectively, of our net sales.
We are currently dependent on three customers, which collectively comprised approximately 28.9% of net revenues for the year ended December 31, 2010. Of these customers, two customers represented greater than 5% but less than 10% of net revenues for the year ended December 31, 2010, and one customer represented greater than 10% but less than 20% of net revenues, while no customers represented greater than 20% of net revenues for the year ended December 31, 2010. For the year ended December 31, 2009, two customers comprised approximately 23.5% of net revenues. Of these customers, one represented greater than 5% but less than 10% of net revenues and one customer represented greater than 10% but less than 20% of net revenues and no customers represented greater than 20% of net revenues for the year ended December 31, 2009.
Stocks Discussed: ADGF,