Business Editors
CARLSBAD, Calif.--(BUSINESS WIRE)--June 4, 2001
Ashworth, Inc. (NASDAQ: ASHW), a leading golf lifestyle sportswear company, announced financial results for its Fiscal 2001 second quarter and six months ended April 30, 2001.
The Company reported second quarter net revenue increased 13.7% to $46.9 million compared to $41.3 million for the same period last year. Second quarter domestic revenue increased 18.8% to $40.3 million from $33.9 million last year and international revenue decreased 10.2% to $6.6 million compared to $7.4 million the prior year. Net income during the quarter increased 16.5% to $4.0 million compared to $3.4 million in the second quarter of last year. Diluted earnings per share increased 15.4% to $0.30 compared to $0.26 during the same period last year.
"We are pleased with our second quarter results," commented Mr. Herrel, Chairman and Chief Executive Officer. "Our strategy of improving operations while building the Ashworth(R) brand is yielding good results. We are particularly encouraged by our success in the golf channel, which is our largest distribution channel. We believe it is our brand strength that is partially insulating our business from the adverse marketplace and weather conditions that are impacting our industry."
Mr. Terence Tsang, Chief Operating Officer and Chief Financial Officer added, "Operational initiatives implemented in recent quarters continued to generate improved financial performance. Inventory was well controlled and our inventory management initiatives resulted in an increase of only 4.5% compared to last year. In light of the business environment during the quarter, we are pleased that gross margin increased slightly to 41.0%, which was the highest in three years. Operating leverage and cost controls further contributed to our operating margin improvement. Accounts receivable increased 29.9% year-over-year reflecting the wholesale revenue growth. In addition, many of our accounts delayed their seasonal re-openings due to weather conditions resulting in later shipping dates during the quarter."
For the six month period ended April 30, 2001, the Company's net revenue increased 17.0% to $74.6 million from $63.8 million last year. Domestic revenue increased 20.1% to $64.4 million from $53.6 million last year and international revenue increased slightly to $10.2 million from $10.1 million last year. Net income for the six months increased 18.2% to $4.4 million from $3.7 million. Diluted earnings per share increased 22.2% to $0.33 compared to $0.27 during the same period last year.
Based on current economic and industry conditions, the Company is revising its revenue and earnings expectations for the second half of Fiscal 2001. In light of the uncertain economic conditions and the impact of unfavorable weather, Ashworth now expects mid-single digit revenue growth during Fiscal 2001 and earnings per share of $0.40 to $0.43 for the full fiscal year.
"We have reacted quickly to external factors once they started affecting our business," commented Mr. Tsang. "To reduce the impact of the lower sales expectations, we have taken decisive action to reduce expenses where possible, which is reflected in our revised Fiscal 2001 guidance. Our revised guidance also includes approximately $0.05 per share of startup expenses related to our strategic alliance with Callaway Golf(R)."
"Looking beyond the near term economic and industry conditions, we remain optimistic about our long term growth prospects," concluded Mr. Herrel. "We are particularly excited about our strategic alliance with Callaway Golf Company (NYSE: ELY). Initial retailer response has been very positive and we believe the new line will contribute significantly to our long term revenue and earnings growth. We have also expanded our involvement with golf's key events, including the US Open Championship and the Open Championship in the United Kingdom. We are continuing our strategic vision to solidify our position as a leading golf-inspired sportswear company, while providing long term growth."
Investors and all others are invited to listen to a conference call discussing the second quarter results. The conference call is scheduled for Monday, June 4, 2001 at 4:45 p.m. Eastern Time. The call will be broadcast over the Internet at www.ashworthinc.com. An online replay will be available until Wednesday, June 6, 2001. Additionally, a replay can be accessed by calling 888-509-0081.
Ashworth, Inc. is a Southern California-based designer of men's and women's golf-inspired lifestyle sportswear distributed domestically and internationally in golf pro shops, resorts and upscale department and specialty stores. Ashworth products include four main brand extensions. Ashworth Collection is a range of upscale sportswear designed to be worn on and off course. Ashworth Authentics showcases the most popular items from the Ashworth line. Ashworth Weather Systems utilizes technology to create a balance between fashion and function in any climatic condition. Ashworth 7 addresses the demand for business casual sportswear. Ashworth is the exclusive licensing partner, in selected markets, for men's and women's Callaway Golf apparel.
To learn more, please visit our new Website at www.ashworthinc.com.
This press release contains forward-looking statements related to the Company's market position, finances, operating results, marketing plans and strategies. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include the timely development and acceptance of new products, as well as strategic alliances, the impact of competitive products and pricing, the success of the women's and corporate distribution channels, the preliminary nature of bookings information, the ongoing risk of excess or obsolete inventory, potential inadequacy of booked reserves and other risks described in Ashworth, Inc.'s SEC reports, including the report on Form 10-K for the year ended October 31, 2000.
ASHWORTH, INC. Consolidated Balance Sheets As of April 30, 2001 and 2000 (Unaudited) April 30, April 30, ASSETS 2001 2000 CURRENT ASSETS Cash and cash equivalents $ 1,657,000 $ 931,000 Accounts receivable-trade, net 48,664,000 37,464,000 Inventories, net 35,873,000 34,344,000 Other current assets 7,349,000 4,720,000 Total current assets 93,543,000 77,459,000 Property and equipment, net 18,697,000 13,856,000 Other assets 1,643,000 2,188,000 $113,883,000 $ 93,503,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 20,502,000 $ 6,534,000 Accounts payable -- trade 4,066,000 4,167,000 Other current liabilities 8,408,000 6,647,000 Total current liabilities 32,976,000 17,348,000 Long-term debt 3,242,000 3,840,000 Other long-term liabilities 1,350,000 1,103,000 Stockholders' equity 76,315,000 71,212,000 $113,883,000 $ 93,503,000 ASHWORTH, INC. Consolidated Statements of Income Second Quarter ended April 30, 2001 and 2000 (Unaudited) Summary of Results of Operations 2001 2000 Second Quarter Net Revenue $46,908,000 $41,272,000 Cost of Sales 27,655,000 24,381,000 Gross Profit 19,253,000 16,891,000 Selling, General and Administrative expenses 12,047,000 10,641,000 Income from Operations 7,206,000 6,250,000 Other Income (Expense): Interest Income 6,000 7,000 Interest Expense (449,000) (229,000) Other Income, net (78,000) (335,000) Total Other Income, net (521,000) (557,000) Income Before Provision for Income Tax Expense 6,685,000 5,693,000 Provision for Income Tax Expense (2,674,000) (2,249,000) Net Income $4,011,000 $3,444,000 Earnings Per Share -- BASIC $0.31 $0.26 Weighted Average Common Shares Outstanding 13,149,000 13,467,000 Earnings Per Share -- DILUTED $0.30 $0.26 Adjusted Weighted Average Shares and Assumed Conversions 13,584,000 13,498,000 Six Months Net Revenue $74,614,000 $63,771,000 Cost of Sales 45,415,000 38,850,000 Gross Profit 29,199,000 24,921,000 Selling, General and Administrative expenses 21,117,000 18,073,000 Income from Operations 8,082,000 6,848,000 Other Income (Expense): Interest Income 8,000 40,000 Interest Expense (780,000) (315,000) Other Expense, net 10,000 (429,000) Total Other Expense, net (762,000) (704,000) Income Before Provision for Income Tax Expense 7,320,000 6,144,000 Provision for Income Tax Expense (2,928,000) (2,427,000) Net Income $4,392,000 $3,717,000 Earnings Per Share -- BASIC $0.33 $0.27 Weighted Average Common Shares Outstanding 13,133,000 13,576,000 Earnings Per Share -- DILUTED $0.33 $0.27 Adjusted Weighted Average Shares and Assumed Conversions 13,510,000 13,598,000
