Callaway Golf Company (NYSE:ELY) has announced its financial results for full year 2008. Highlights for the year include:
• Net sales of $1.117 billion, which was the second highest sales level in the Company’s history and only slightly less than the record sales of $1.125 billion in 2007.
• Gross profit was $486.8 million for 2008 (or 44% of net sales) compared to $493.2 million (or 44% of net sales) in 2007. Excluding the impact of the gross margin improvement charges, pro forma gross profit percentages for both 2008 and 2007 would have been 45%.
• Operating expenses for 2008 were $402.6 million (or 36% of net sales) compared to $403.0 million (or 36% of net sales) in 2007.
Fully diluted pro forma earnings per share of $.94 (on 63.8 million shares outstanding), an increase of approximately 6% compared to $.89 (on 67.5 million shares outstanding) in 2007. Fully diluted pro forma earnings per share for 2008 exclude a non-cash, non-operational benefit of $.22 per share related to the reversal of an energy derivative valuation account established in 2001 in connection with the Company’s termination of a long – term energy supply contract.
Pro forma earnings also exclude for 2008 and 2007 charges related to the Company’s gross margin initiatives in the amount of $0.12 and $0.08 per share, respectively. Including these benefits and charges, reported earnings per share for 2008 were $1.04 compared to $.81 in 2007.
“We are very pleased that we were able to deliver a 6% increase in pro forma earnings per share in a very difficult economic environment,” commented George Fellows, president and CEO. “The many initiatives we implemented over the last three years allowed us to react quickly to the rapid decline in economic conditions and grow our earnings per share despite the challenges presented.”
Business Outlook
“Looking forward,” continued Mr. Fellows, “we expect more challenges as a result of continued unfavorable global economic conditions. In addition, given the recent overall strengthening of the US dollar, we anticipate that foreign currency exchange rates will have a significant adverse impact upon the translation of our international results in 2009 and therefore on our consolidated results. Because it is too difficult to predict what consumer spending or foreign currency rates will be in this environment, we are not providing specific financial guidance for 2009 at this time.”
“Despite these macroeconomic challenges, our fundamental business operations remain strong and are executing well,” added Mr. Fellows. “Callaway Golf is in an enviable position compared to many other companies given the strength of our brands, our improved supply chain, and our strong balance sheet. In addition, our strong 2009 product line-up will give us an advantage when the retail market begins to improve. We will continue to carefully manage our costs and inventories, but also intend to continue to invest in initiatives that will drive longer term growth so that we are fully prepared to take advantage of opportunities when the global economy begins to recover.”
Callaway Golf Company www.callawaygolf.com