Aldila Sales and Earnings Down; Composites Improving
SAN DIEGO -- Aldila, Inc. (NASDAQ/NMS:ALDA) today reported net sales of $10.6 million for the first quarter ended March 31, 1999, compared to net sales of $19.1 million reported in the first quarter of 1998. The company also reported a net loss of $0.3 million for the first quarter of 1999, compared to net income of $1.1 million in the 1998 first quarter ($0.02 loss per diluted share for 1999 vs. $0.07 earnings per diluted share for 1998.)
"As previously stated, our core golf shaft business is being negatively impacted by reduced product demand across all three market segments - premium, distribution and value," said Peter R. Mathewson, President and Chief Operating Officer, Aldila Golf Corp. "Inventory reduction initiatives by many of our customers have resulted in a cautious buying environment. Near term we expect to see no dramatic improvement.
"We continue to employ the appropriate cost reduction steps including a steady shift of manufacturing from the U.S. to Mexico and China," Mathewson said. "We believe our growing in-house materials capability and worldwide manufacturing operations will enable us to continue as the competitive price leader and service provider in graphite golf shafts. Our new 80,000 square foot facility in Zhuhai has begun operations and we are excited about its prospects for the future."
Aldila said that its outside customer sales of carbon fiber and composite prepreg increased 144% in the first quarter of 1999 over the 1998 quarter, with approximately one half of the increase related to composite prepreg and the balance in carbon fiber. On a consolidated basis, materials sales represented 9% of 1999 first quarter sales as compared to 2% in the comparable quarter of 1998.
"We are continuing our efforts to build revenue through product diversification," said Gary T. Barbera, Chairman and Chief Executive Officer. "The primary advantages of carbon fiber composites versus steel are significant weight savings, high strength and stiffness, which are ideal for a variety of industrial and aerospace products, as well as sports applications.
"Aldila's strong base of composite materials and processing expertise, backed by its network of worldwide manufacturing options, positions the company as a versatile and competitive source for high quality carbon fiber and prepreg and for future business development," said Barbera.
Aldila designs, manufactures and markets graphite golf shafts used in clubs assembled and manufactured throughout the world by leading golf club companies, pro shops, club shops and repair shops. Through vertical integration the company manufactures carbon fiber and composite prepreg for its golf shaft business and for outside sale to commercial customers.
This release contains forward-looking statements based on management's expectations as of the date hereof that necessarily contain certain assumptions and are subject to certain risks and uncertainties. The company does not undertake any responsibility to update these statements in the future. The company's 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, including (i) risks associated with the addition of the new facility in China (such as the need to obtain governmental permits and approvals, potential construction delays, and the need to hire and train additional employees), (ii) the ability to produce high volumes of carbon fiber at lower cost at the Evanston, Wyoming facility in order to generate incremental profitable revenues through the sale of carbon fiber products other than graphite golf shafts, (iii) changes in demand by the company's customers for graphite golf shafts, graphite prepreg and carbon fiber (due to factors such as changes in consumer demand for products including the company's products, changes in availability or prices for golf shafts, graphite prepreg or carbon fiber, changes in inventory purchasing practices by the company's customers), (iv) the availability of raw materials for the company's manufacturing operations (principally carbon fiber and acrylic fiber) at anticipated prices, (v) the ability of the company to develop new customer relationships with users of graphite prepreg and carbon fiber, (vi) risks resulting from the increasing portion of the company's manufacturing operations that is conducted in Mexico and China (including the risk of political instability, export/import regulation, currency exchange rate risk, and cultural differences), and (vii) the company's ability to sublease its Rancho Bernardo facility on a timely basis and in the manner anticipated (which in turn depends in part on the market for leased real property of this type in the vicinity of Rancho Bernardo). The company's filings with the Securities and Exchange Commission present a more detailed discussion of these and other risks related to the forward looking statements in this press release.