Callaway Golf Company yesterday announced its second quarter and first half 2012 financial results.
The announced results were consistent with the preliminary estimates provided earlier this month and reflect the previously estimated increases in sales and earnings for the second quarter and first half of 2012 compared with the same periods in 2011.
The Company also announced that its cost-reduction initiatives are proceeding well and on pace to deliver the $52 million in targeted gross annualized savings, with an estimated $16 million and $36 million being realized in 2012 and 2013, respectively.
Callaway Golf Company (NYSE:ELY) declared a regular quarterly cash dividend of $0.01 per share on its Common Stock. The dividend is payable on September 17, 2012 to shareholders of record at the close of business on August 20, 2012.
The Company also declared a regular quarterly cash dividend of $1.875 per share on its 7.50% Series B Cumulative Perpetual Convertible Preferred Stock. The dividend is payable on September 17, 2012 to shareholders of record as of August 20, 2012.
Callaway Golf www.callawaygolf.com
“We are pleased that sales and earnings increased during the first half of 2012 compared to the same period in 2011,” commented Chip Brewer, President and Chief Executive Officer. “The pace of improvement, however, is slower than anticipated and our market shares have not met our expectations, resulting in higher than expected retail inventory levels at this time of year. As a result, we have lowered our sales expectations for the second half of the year to allow us to work through any excess inventory at retail and prepare our business for improved results in 2013.”
“The recently announced cost-reduction initiatives are proceeding on pace with our plan,” continued Mr. Brewer. “Having been through this before, I am convinced we are taking the correct actions to assure that this turnaround will be successful. Given the dynamics of the golf business, with products being introduced annually, it takes time for the turnaround to take effect. Many of the changes we are making at this time to reduce costs, streamline our business, and change our products and the culture at the Company to be more consumer oriented, will have a greater impact on our financial results in 2013 and 2014 than the current year. I do firmly believe that the changes we are making will be the keystone to a successful recovery and I look forward to reporting to you on our progress.”
Business Outlook
The Company provided additional financial guidance, estimating that full year 2012 net sales will range from $835 to $865 million compared to $887 million in 2011. The Company’s estimated decline in net sales includes the impact of actions taken by the Company during the first half of the year to streamline its business, including the sale of the Top-Flite and Ben Hogan brands and the transition of its footwear and apparel businesses to a licensing model. The Company also reiterated its earnings guidance, estimating that full year pro-forma loss per share will range from $0.55 to $0.75, compared to a pro forma loss per share of $0.63 in 2011. These pro forma estimates exclude from 2012 benefits and charges associated with the sale of the Top Flite/Ben Hogan brands, non-cash tax adjustments, and the cost-reduction initiatives and exclude from 2011 charges relating to a non-cash impairment of assets, non-cash tax adjustments, global operations strategy, restructuring, and the gain on the sale of buildings in 2011.
Conference Call and Webcast
The Company has held a conference call to discuss the Company’s financial results, business and the recently announced cost-reduction initiatives. The call was broadcast live over the Internet and at www.callawaygolf.com . A replay of the conference call is available and will remain available through 9:00 p.m. PDT on Thursday, August 2, 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 12218357.