Callaway Golf Company has announced its results for the first quarter of 2012 and provided revised guidance for the first half of 2012
First quarter net sales were $285 million, compared to $286 million in 2011 and the Company has provided revised guidance for the first half of 2012 as follows:
- Net sales for the first half of 2012 are projected to be $560 – $575 million, compared to $559 million in 2011 and compared to prior guidance of $610 – $630 million.
- Gross margins for the first half of 2012 are projected to be approximately 43%, compared to 43% in 2011 and compared to prior guidance of 44%.
In the first quarter of 2012 the Company completed several strategic initiatives including the sale of Top-Flite and Ben Hogan brands and settlement of the long-running legal battle with Acushnet.
“I am very pleased to be a part of the Callaway Golf team and am excited about the long-term potential of Callaway,” commented Chip Brewer, President and Chief Executive Officer. “There were many initiatives underway when I arrived at Callaway targeted at reducing costs and simplifying the business and thus providing greater focus on the Company’s core business.
“I would like to thank Tony Thornley for his time and efforts in initiating these actions over the past several months. I believe there are tremendous growth opportunities with our core Callaway Golf and Odyssey brands and believe that the Company’s renewed focus on these brands, together with the other actions we have taken, will enable us to capture this growth and drive profitability.”
Actions to accelerate recovery
“We are pleased with the progress we have made against these key strategic initiatives and the year over year improvement in the Company’s financial performance,” continued Mr. Brewer. “Sales of woods, premium golf balls, and accessories are up, total sales in the United States and Japan have increased, and our operating expenses have improved despite planned incremental investment in brand and demand creation initiatives.
“We also completed the sale of our Top-Flite and Ben Hogan brands, settled much of our outstanding litigation, and expanded our apparel license agreement in North America, which allows us to increase our focus on the Company’s core business.
“With that said, we are unsatisfied with the pace at which our financial performance and market positions are improving and we will be taking actions to accelerate this pace of recovery.”
“While the actions we have taken recently to reduce costs and provide renewed focus on the Company’s core brands were important initiatives, there is more work to be done to maximize the Company’s full potential,” continued Mr. Brewer. “During my brief time here, we have already made changes aimed at strengthening our business and increasing our long-term competitiveness and we will continue to do so. With a renewed focus on our core business, strong Callaway Golf and Odyssey brands, industry leading research and development capabilities, and an outstanding group of employees, we believe we have all the components necessary to drive sustainable long term growth and increase shareholder value.”
Business Outlook
“Our business is recovering compared to last year, albeit at a slower pace than we estimated in our guidance provided in January,” commented Brad Holiday, Chief Financial Officer. “Given the current pace of recovery, the impact of the sale of Top-Flite and Ben Hogan assets, and the expansion of the North America apparel license, we are revising our first half financial guidance. Additionally, while we expect a significant improvement in our full year financials compared to 2011, both on a GAAP and pro forma basis, we are suspending full year guidance at this time.”
The Company provided revised guidance for the first half of 2012 as follows:
- Net sales for the first half of 2012 are projected to be $560 – $575 million, compared to $559 million in 2011 and compared to prior guidance of $610 – $630 million.
- Gross margins for the first half of 2012 are projected to be approximately 43%, compared to 43% in 2011 and compared to prior guidance of 44%.
- Operating expenses for the first half of 2012 have not changed and are still projected to be $214 million compared to $209 million in 2011.
Conference Call Webcast
A replay of the conference call to discuss the Company’s financial results and business will be available until 9:00 p.m. PDT on Thursday, May 3, 2012. The replay may be accessed through the Internet at www.callawaygolf.com or by telephone by calling 1-855-859-2056 toll free for calls originating within theUnited States or 404-537-3406 for International calls. The replay pass code is 69148430.
Callaway Golf www.callawaygolf.com