Net income for 2004 decreased to a loss of $20.1m from income of $10.9m in 2003. Adjusted EBITDA decreased to $28.6m in 2004 from $36.1 million in 2003.
Scott Hennessy, True Temper's president and CEO said: "On a full year basis our sales decreased approximately 15 percent from 2003. This is roughly the same year-to-date decline that we experienced through September 2004, and the fourth quarter saw a continuation of the sluggish market conditions which began in the early summer months.
"During the fourth quarter of 2004 we continued to see the same unfavorable market conditions we have previously described, including excess inventory in the distribution channel, delays in new product launches from our OEM partners, and adverse weather conditions throughout the United States affecting the amount of golf being played. In addition to these adverse conditions, it also became apparent during the fourth quarter that many in the golf industry began looking past the current year and into 2005, placing continued pressure on the revenue line.
"This extended decline in revenue has challenged us to be very aggressive in managing expenses at every level in our organization. During 2004 we took the necessary steps to mitigate the impact of the sales decline on our profitability and cash flow. We right-sized our manufacturing facilities to maintain gross profit percentages near historic levels, and we made strategic, short-term cuts to non-critical SG&A expenses. Our efforts enabled us to deliver adjusted EBITDA at 29% of sales for the full year, very near our benchmark 30% level, and positive cash flow from operating activities of nearly $10m.
"In addition to our cost control efforts, we also completed the transition of substantially all of our graphite golf shaft production into our new facility in Guangzhou, China. The transition went smoothly from an operations and customer support perspective, and with this new, lower cost manufacturing alternative we are well positioned to grow our graphite golf and performance sports businesses in 2005."