Callaway Golf Company Announces Significantly Improved Full Year Financial Results and Provides 2014 Financial Guidance
- 2013 full year net sales of the Company’s current business, on a constant currency basis, increased 14%. On a GAAP basis, net sales increased 1% for the full year.
- 2013 non-GAAP operating income/loss improved by $74 million to $5 million of income in 2013, compared to a non-GAAP operating loss of $69 million in 2012. On a GAAP basis, 2013 operating loss improved by $105 million to a loss of $11 million compared to a loss of $116 million in 2012.
- 2013 full year non-GAAP loss per share of ($0.02) compared to a non-GAAP loss per share of ($0.77) in 2012. On a GAAP basis, 2013 full year loss per share of ($0.31), compared to a loss per share of ($1.96) in 2012.
Callaway Golf Company (NYSE:ELY) has announced its fourth quarter and year-to-date 2013 financial results, clearly demonstrating that its turnaround is well underway. Led by a more than $55 million (28%) increase in driver and fairway woods sales, the Company’s full year results include sales growth as well as significant improvements in gross margins and operating expenses. As a result, the Company’s operating income/loss improved by $105 million to a loss of $11 million compared to a loss of $116 million in 2012, and on a non-GAAP basis was profitable for the first time in several years. Given this significantly improved financial performance, along with the initial trade reception to the Company’s 2014 product line, the Company’s annual guidance announced today predicts a return to profitability in 2014 on a GAAP basis.
The Company achieved these financial results despite a late start to the golf season in the Americas and Europe due to weather, adverse changes in foreign currency rates, and a significantly reduced base business resulting from the 2012 sale of the Top-Flite and Ben Hogan Brands and the transition to a licensing arrangement for apparel and footwear in North America.
As compared to 2012, the sale of these brands and licensing arrangements negatively impacted 2013 sales by approximately $57 million for the full year (approximately $4 million for the fourth quarter). In addition, as compared to 2012, changes in foreign currency rates negatively affected 2013 net sales by approximately $40 million for the full year (approximately $8 million for the fourth quarter). Unfortunately, these factors mask the strength of the Company’s improved performance of its current business. For example, compared to 2012, on a constant currency basis, the Company’s current business, which excludes the sold or licensed brands and businesses, actually achieved 14% sales growth for the full year of 2013 (17% sales growth for the fourth quarter of 2013). Overall, these results reflect not only the continued success of the Company’s turnaround plan but also the increased hard goods market share and brand momentum the Company experienced in 2013.
“We are pleased with our financial results during the first full year of our new operating model,” commented Chip Brewer, President and Chief Executive Officer. “Despite challenging market conditions throughout much of the year, we were able to grow sales of our current business, on a constant currency basis, by 14%. This sales growth, together with the benefits resulting from the many actions we have taken this year to improve our operations, have a resulted in a $74 million improvement in non-GAAP operating income and even more on a GAAP basis. In fact, this year we achieved positive operating income on a non-GAAP basis for the first time since 2008, which is an important milestone in our turnaround and clear evidence we are on the right track.”
“We have made great progress to date in our turnaround,” continued Mr. Brewer. “In addition to refocusing our business on golf equipment and more performance-oriented products, leveraging our strengths in research and development, and changing our approach to sales and marketing, we have also retired all of our preferred stock, increased our presence on tour, and completed the transition of our golf ball and golf club manufacturing platforms. The progress we made continued through the fourth quarter with improvements in sales, gross margins, and operating expenses. We believe that this continued progress and the initial positive trade reception to our 2014 product line position us for a good start to the new golf season and a return to creating shareholder value in 2014.”
The Company will be holding a conference call at 2:00 p.m. PST today to discuss the Company’s financial results, business and outlook. The call will be broadcast live over the Internet and can be accessed at www.callawaygolf.com
To listen to the call, please go to the website at least 15 minutes before the call to register and for instructions on how to access the broadcast. A replay of the conference call will be available approximately three hours after the call ends, and will remain available through 9:00 p.m. PST on Wednesday, February 5, 2014. 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 the United States or 404-537-3406 for International calls. The replay pass code is 35580882.