Callaway Golf Company (NYSE:ELY) has announced its financial results for the second quarter and first half ended June 30, 2008, including record sales and earnings for the first half of 2008.
Highlights for the second quarter include:
• Net sales of $366 million, a decrease of 4% versus 2007’s record second quarter sales of $380 million.
• Fully diluted earnings per share of $0.58 (on 63.9 million shares outstanding), an increase of approximately 9% compared to $0.53 (on 69.3 million shares outstanding) in 2007. Fully diluted earnings per share for the second quarter include after-tax charges for gross margin improvement initiatives of $0.05 per share in 2008 and $0.02 per share in 2007.
• Gross profit as a percentage of net sales for the second quarter of 2008 increased to 46.7% from 46.1% in the second quarter of 2007. Excluding the impact of the gross margin initiatives charges, gross profit percentages for the second quarter of 2008 increased 140 basis points to 48.0% versus 46.6% in the second quarter of 2007.
• Operating expenses for the second quarter of 2008 were $110.8 million (or 30% of net sales) compared to $113.0 million (or 30% of net sales) in 2007.
• The Company repurchased 1.5 million shares of stock for $20 million for the quarter at an average price of $13.59 per share.
Highlights for the first six months include:
• Record net sales of $732.5 million, an increase of 2% versus last year’s record of $714.6 million.
• Record fully diluted earnings per share of $1.19 (on 64.4 million shares outstanding), an increase of 18% as compared to $1.01 (on 68.8 million shares outstanding) in 2007. Fully diluted earnings per share for the period include after-tax charges for gross margin improvement initiatives of $0.06 per share in 2008 and $0.03 per share in 2007.
• Gross profit for 2008 was $346.6 million (or 47.3% of net sales) compared to $335.8 million (or 47.0% of net sales) for 2007. Excluding the impact of the gross margin initiatives charges, pro forma gross profit percentages for 2008 would have been 48.1% compared to 47.5% in 2007.
• Operating expenses for 2008 were $221.4 million (or 30% of net sales), compared to $217.9 million (or 30% of net sales) for 2007.
“We’ve reached the halfway point of 2008 and despite the challenging economic conditions in the United States we have delivered record sales and earnings over a strong 2007,” commented George Fellows, president and CEO. “These results speak to the strength of our brands and our international business, which has delivered ahead of expectations and more than offset the softness we have experienced in our U.S. business.”
“We continue to make excellent progress on our gross margin improvement initiatives and are on track to achieve our original two year commitment of $50 to $60 million in savings,” continued Mr. Fellows. “While product mix and to a lesser extent commodity costs will work against us this year, we currently estimate our full year gross margins will still improve at least 100 basis points compared to 2007. In addition, we are on track to achieve our inventory reduction initiatives announced earlier this year.”
The Company has held a conference call which will be available for viewing on the internet until 6th August. The replay may be accessed at www.callawaygolf.com or by telephone by calling 1-800-475-6701 toll free for calls originating within the United States or 320-365-3844 for International calls. The replay pass code is 954802.
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