Callaway Golf Company (NYSE: ELY) has announced its third quarter 2016 financial results, including a 6.9% increase in net sales, continued benefits from its operational improvements and a net loss of $0.06 per share. The Company generally reports a net loss in the third quarter due to the seasonality of its business but the Company had expected a net loss of $0.15 – $0.10 as a result of a planned increase in operating expenses in the third quarter of 2016 compared to 2015. The increased sales, however, offset the increased expenses.
These results reflect the Company’s continued brand strength and additional hard goods market share gains, as well as the commencement of the Company’s joint venture in Japan in the third quarter of 2016. The third quarter financial results allowed the Company to narrow its 2016 full year net sales guidance to the high end of the range to $870 – $880 million and increase its 2016 full year earnings guidance to $0.50 – $0.54.
“We were pleased to see our continued momentum in the marketplace in the third quarter,” commented Chip Brewer, President and Chief Executive Officer of Callaway Golf Company. “Despite industry headwinds and softer than expected market conditions, we grew our net sales in the third quarter. We also continued to realize benefits from the comprehensive strategic initiatives we undertook during the last three years, including working capital improvements and the extension of product life cycles, with gross margins improving 110 basis points year to date and cash generated from operating activities increasing over 200% to $86 million for the first nine months of 2016 compared to the same period in 2015.”
Mr. Brewer continued, “I am confident we are on track to create long-term shareholder value through our improved core business as well as future growth from strategic ventures within golf or in areas tangential to the golf equipment business. For instance, during the third quarter, we acquired Toulon Design and hired its founder, Sean Toulon, to run our putter business. I couldn’t be more excited about the opportunity to expand the Odyssey brand as we extend our reach further into the super-premium putter category through Toulon Design by Odyssey. We are also re-investing in the future of our golf ball business via further investment in R&D and today’s announced hiring of Rock Ishii, former Sr. Director of Golf Ball Innovation at Nike.
“Looking forward, we will continue to opportunistically seek new strategic growth platforms and strategic high return investments in our core business. We will also continue to strengthen our core business through disciplined operational execution and the introduction of technologically advanced products. We are very excited about our product line for 2017.”
Callaway Golf www.callawaygolf.com