Callaway Golf Company (NYSE:ELY) has announced its financial results for the first quarter ended 31st March 2006, reporting significant improvements in earnings over the same period a year ago. Highlights for the quarter include:
- Net sales of $302.4 million, as compared to $299.9 million for the same period in 2005.
- Fully diluted earnings per share of $0.33 on 70.1 million shares, or growth of 22%, as compared to $0.27 on 68.6 million shares in 2005.
- Fully diluted earnings per share include $0.02 of after-tax charges for employee equity-based compensation associated with FAS 123R as well as $0.01 for the integration of Top-Flite operations. The first quarter of 2005 included after-tax charges of $0.03 for the integration of Top-Flite operations.
- Excluding these charges, the Company’s pro forma fully diluted earnings per share for the first quarter of 2006 would have increased 20% to $0.36, as compared to pro forma fully diluted earnings per share of $0.30 for the first quarter of 2005.
“We are pleased with the initial consumer acceptance of our new products this year and the fact that we achieved the second highest first quarter sales level in the history of the Company,” commented George Fellows, president and CEO. “Achieving this level of sales was significant because product launches in the first quarter of 2006 were timed later in the quarter as compared with product launches last year. We are even more pleased that we were able to leverage 1% growth in revenue to achieve 22% growth in fully diluted earnings per share,” continued Mr. Fellows. “Our cost reduction and other initiatives permitted us to bring this substantial increase to our bottom line despite an additional 1.5 million shares in our base.
“Although we were particularly pleased with our results this quarter and remain optimistic about significant improvement in 2006 earnings compared to last year, our focus is on our longer term goals. We are right on track with those targets and we look forward to Callaway Golf’s long term prospects and our continued leadership in the golf industry.”
Sales in the United States and Europe fell 2 percent and 4 percent, respectively, while sales in Japan, a key golf market, rose 5 percent.
Woods were the biggest revenue driver, with 48 percent growth, compared with a 20 percent decrease in irons and a 22 percent decrease in putters. Sales of golf balls fell 6 percent. Callaway has been consolidating its golf ball manufacturing operations and integrating the Top-Flite golf ball business into the company’s operations. Operating expenses in the quarter decreased 6 percent.
The company, which in past years has faced fierce competition from lower-priced rivals and struggled with an inefficient supply chain and high expenses, is in the midst of a restructuring geared toward saving $70 million a year by 2007.
Reuters reports that the company’s shares closed at $15.83 on the New York Stock Exchange, down less than 1 percent, and rose 3 cents in after- hours trading.
The Company has held a conference call broadcast live over the Internet. A replay of the conference call is now available and will remain available until 9.00 p.m. PDT on Friday, 5th May 2006. The replay may be accessed through the Internet 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 826757.
Callaway Golf www.callawaygolf.com