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Adams Golf Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 8, 2011 11:26PM
Adams Golf Inc. (ADGF) filed Quarterly Report for the period ended 2011-09-30. Adams Golf Inc. has a market cap of $43.1 million; its shares were traded at around $5.6 with a P/E ratio of 8.4 and P/S ratio of 0.5.
Highlight of Business Operations:As the above table indicates, net sales of our products outside the United States decreased to $3.3 million, or 16.1% of total net sales, from $4.4 million, or 21.8% of total net sales, for the three months ended September 30, 2011 and 2010, respectively. Net sales resulting from countries outside the United States and Canada decreased to 8.6% of total net sales for the three months ended September 30, 2011 from 9.6% for the comparable period of 2010.
Net sales of irons increased to $55.8 million, or 65.8% of total net sales, for the nine months ended September 30, 2011 from $50.7 million, or 68.8% of total net sales, for the comparable period of 2010. Net sales of irons for the nine months ended September 30, 2011 primarily resulted from sales of the recently introduced Idea Pro a12, a12 OS irons and Redline irons along with the Idea Tech V3 irons, the Idea a7 and a7 OS irons and integrated iron sets and a smaller portion of sales resulted from the close out of the Idea a4 irons. For the comparable period of 2010, net sales primarily resulted from sales of the Idea a7 and a7 OS irons, Idea Tech V3 irons, Idea Black family of irons and a smaller portion of sales resulted from the close out of the Idea a3 OS irons and integrated iron sets.
Net sales of our products outside the United States increased to $16.2 million, or 18.9% of total net sales for the nine months ended September 30,2011, from $14.7 million, or 19.7% of total net sales, for the comparable period in 2010, respectively. Net sales resulting from countries outside the United States and Canada increased to 7.1% of total net sales for the nine months ended September 30, 2011 from 6.5% for the comparable period of 2010.
Selling and marketing expenses increased to $20.2 million for the nine months ended September 30, 2011 from $17.3 million for the comparable period in 2010. The increase was primarily the result of an increase in marketing and tour expense of $1.3 million, increased commission expense of $0.6 million associated with higher revenues and increased compensation expense of $0.7 million.
Working capital, or our current assets less our current liabilities, increased to $42.7 million at September 30, 2011 from $35.9 million at December 31, 2010. Approximately 37% of our current assets were comprised of accounts receivable at September 30, 2011, compared to 32% at December 31, 2010. Due to industry sensitivity to consumer buying trends, seasonality and available disposable income, we have in the past extended payment terms for specific purchase transactions. Issuance of these terms (i.e., greater than 30 days or specific dating) is dependent on our relationship with the customer and the customer's payment history. Payment terms are extended to selected customers typically during off-peak times in the year in order to promote our brand name and to assure adequate product availability and to coincide with planned promotions or advertising campaigns. Although a significant amount of our sales are not affected by these terms, the extended terms do have a negative impact on our financial position and liquidity. Due to the competitiveness of the golf retail market, we believe that more customers may request payment terms and we expect to continue to selectively offer extended payment terms in the future, depending upon known industry trends and our financial condition. We generate cash flow from operations primarily by collecting outstanding trade receivables. Because we have limited cash reserves, if collections of a significant portion of trade receivables are unexpectedly delayed, we would have a limited amount of funds available to further expand production until such time as we could collect such trade receivables. If our cash needs in the near term exceed the available cash and cash equivalents on hand and the available borrowing under our credit facility, we would be required to obtain additional financing, which may not be available at all or in the full amounts necessary, or limit expenditures to the extent of available cash on hand, all of which could adversely effect our current growth plans.
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