Callaway Golf Company (NYSE:ELY) has announced its fourth quarter and full year 2012 financial results
- 2012 Fourth Quarter net sales of $118 million and pro forma loss per share of $0.49 are consistent with the Company’s guidance last quarter. GAAP loss per share of $1.03.
- 2012 Full Year net sales of $832 million and pro forma loss per share of $0.78. GAAP loss per share of $1.98.
Callaway estimates full year 2013 net sales of approximately $850 million; pro forma net income at breakeven; and pro forma loss per share of $0.04.
“Our pro forma financial results for the fourth quarter and full year reflect both the previously reported challenges our business faced during 2012 as well as the actions we took during the year to prepare our business for a turnaround in 2013,” commented Chip Brewer, President and Chief Executive Officer.
“While our 2012 financial results were disappointing, as I look back on the year, I am very pleased with the pace and direction of change we implemented. During 2012, we
- made several key additions to the senior management team
- sold the Top-Flite and Ben Hogan brands
- licensed our footwear and apparel businesses
- began transitioning our GPS business to a third party model
- strengthened our presence on tour worldwide
- restructured our Americas and European sales organizations
- improved our manufacturing and supply chains
- re-energized our global product development team
- overhauled our approach to global marketing
- refinanced a majority of our outstanding convertible preferred stock with less expensive 3.75% convertible debt
- and implemented major reductions in force and other cost reductions which should result in annualized savings of $60 million.
These changes are also driving cultural and behavioral changes at Callaway which, along with our renewed focus on our core golf clubs and golf ball businesses, should serve as the keystone to our turnaround.”
“Looking forward, I am encouraged on several fronts,” continued Mr. Brewer. “On a macro basis, we continue to anticipate a slow but steady market recovery in the U.S. as well as growth opportunities in Asia. During the second half of 2012, we saw stabilization of our overall market share and lower retail inventory as a result of improved sell-through performance in most of our key markets.
“Additionally, we are encouraged with the early response we’ve received on our 2013 product line and marketing message. Our expectation is to re-gain hard goods market share in each of our major markets (Americas, East Asia, Southeast Asia Pacific and Europe). Despite this optimism, we remain mindful that there is much work to be done, we continue to anticipate an extremely competitive market place, and we know that our success ultimately will be determined by the consumer as measured by both sell-through and customer loyalty generated from our product performance and brand appeal. All things considered, I remain confident in our turnaround plans and optimistic on our long-term outlook. All of us at Callaway are excited for the start of the 2013 season.”
Business Outlook
The Company provided guidance for the full year and first half of 2013 as follows:
Net Sales
The Company estimates that net sales for the full year 2013 will be approximately $850 million compared to $832 million in 2012. Net sales related to the Company’s continuing brands and business were $772 million in 2012, with net sales relating to the brands and businesses that were sold or transitioned to a third party model of approximately $60 million.
The Company estimates that net sales for the first half of 2013 will be approximately $555 million compared to $566 million in 2012. The Company’s estimated net sales for the first half of 2013 would represent an increase of 7% over the first half 2012 net sales of $519 million related to the Company’s continuing brands and business.
Earnings
The Company estimates that 2013 full year non-GAAP pro-forma net income will be breakeven with a non-GAAP pro forma loss per share of $0.04 due to the impact of dividends paid on the Company’s outstanding convertible preferred stock. In 2012, the Company’s non-GAAP pro forma loss was $43.9 million with a non-GAAP pro forma loss per share of $0.78.
The Company estimates that first half 2013 non-GAAP pro forma net income will be approximately $28 million (an increase of 33% compared to $21 million for the same period last year) and that non-GAAP pro forma earnings per share will be approximately $0.33 per share as compared to $0.25 per share for the first half of 2012.
The non-GAAP pro forma estimates of net income and earnings per share exclude for 2013 carryover charges related to the Company’s prior cost-reduction initiatives and exclude for 2012 gains and charges relating to the sale of the Top Flite/Ben Hogan brands and the cost-reduction initiatives. The pro forma estimates for both 2013 and 2012 are based upon an assumed tax rate of 38.5%. The schedules to this release include a reconciliation of the non-GAAP information to the most directly comparable GAAP information.
Callaway Golf www.callawaygolf.com