Aldila Inc. (ALDA) filed Quarterly Report for the period ended 2009-06-30.
Aldila Inc. is the leading designer and manufacturer of high-quality innovative graphite golf shafts. The company is one of the few independent shaft manufacturers with the technical and production expertise required to produce high-quality graphite shafts in quantities sufficient to meet rapidly growing demand. The company\'s current golf shaft product line consists of Aldila and G. Loomis branded products designed for custom club makers as well as custom shafts developed in conjunction with its major customers. Aldila Inc. has a market cap of $19.1 million; its shares were traded at around $3.7 with and P/S ratio of 0.3. Aldila Inc. had an annual average earning growth of 102.6% over the past 5 years.
Highlight of Business Operations:
Net sales decreased by $3.1 million, or 23%, for the 2009 Quarter as compared to the 2008 Quarter. The decrease in sales was attributed to decreases in Composite Product and Composite Materials sales. The decrease in the Composite Product sales of $2.3 million is mainly attributed to a decrease in OEM production shafts and branded shafts, which was partially offset by an increase in the sales of co-branded shafts. The golf industry continues to be impacted by the worldwide recession with an estimated contraction of the golf market between twenty and thirty percent. Club companies continue to actively manage their inventories as they prepare to launch their 2010 product lines. We believe our market share remains
Total gross profit decreased by approximately $1.2 million, or 47%, in the 2009 Quarter as compared to the 2008 Quarter. The decrease in Composite Products gross profit was mainly attributed to the decrease in net sales in the 2009 Quarter as compared to 2008 Quarter. The Company has attempted to mitigate this decrease by actively managing its expenses and shifting more of manufacturing to Asia from Mexico. The Company continues to analyze its operations in Mexico for further potential cost cutting efforts. Composite Products gross margin decreased to 10% for the 2009 Quarter as compared to 18% for the 2008 Quarter, which is mainly attributed to lower volumes for the Company to spread its manufacturing costs across. The Composite Materials gross profit decreased by approximately $188,000, or 30%, in the 2009 Quarter as compared to the 2008 Quarter. The decrease was mainly attributed to a decrease in the quantity of Composite Materials shipped in the 2009 Quarter as compared to the 2008 Quarter. Composite Materials gross margin was 28% for the 2009 Quarter as compared to 27% for the 2008 Quarter.
Operating loss increased by $400,000, or 52%, in the 2009 Quarter as compared to the 2008 Quarter. The increase in operating loss was attributed to a decrease in gross profit of $1.2 million, which was partially offset by a decrease in SG&A expenses of $834,000. The Company is aggressively managing its expenses, which resulted in the decreases in SG&A expenses. SG&A expenses decreased as a percentage of revenues to 24% in the 2009 Quarter as compared to 25% for the 2008 Quarter. The majority of the decrease in SG&A expenses was attributed to a decrease in advertising and promotional expenses of approximately $900,000 in the 2009 Quarter as compared to the 2008 Quarter.
The Company recorded a benefit for income taxes in the amount of $649,000 in the 2009 Quarter as compared to $283,000 for the 2008 Quarter. The Company’s effective tax rate was 51% for the 2009 Quarter as compared to 35% for the 2008 Quarter. The Company’s 51% effective rate is driven by foreign taxable income at statutory rates which are less than the statutory rates in the United States. The foreign taxable income created a larger taxable loss in the United States. The current effective tax rate may not be indicative of the Company’s effective rate in the future.
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