Callaway Golf Company (NYSE:ELY) has announced its financial results for the quarter and nine months ended 30th September 2005, reporting significant improvements in both sales and earnings. Some of the details for the quarter include:
- Net sales of $220.6 million, as compared to $128.5 million in the third quarter of 2004.
- Net loss per share of $0.07 on 68.8 million shares, as compared to a net loss of $0.53 per share on 67.8 million shares in the third quarter of 2004.
- The net loss per share for the third quarter of 2005 includes after-tax charges of $0.08 per share associated with the integration of the Top-Flite operations acquired in late 2003 and the recently announced restructuring initiatives. The net loss per share for the third quarter of 2004 includes after-tax charges of $0.07 per share associated with the integration of the Top-Flite operations. Excluding these charges, the Company’s pro forma fully diluted earnings per share for the third quarter of 2005 would have been $0.01, as compared to a pro forma net loss per share of $0.46 per share in the third quarter of 2004.
Details for the first nine months of 2005 include:
- Net sales of $843.6 million, as compared to $790.2 million in the first nine months of 2004.
- Fully diluted earnings per share of $0.46 on 69.0 million shares, as compared to fully diluted earnings per share of $0.27 on 68.2 million shares for the first nine months of 2004.
- Fully diluted earnings per share for the first nine months of 2005 includes after-tax charges of $0.14 per share associated with the integration of the Top-Flite operations and the recently announced restructuring initiatives. Fully diluted earnings per share for the first nine months of 2004 includes after-tax charges of $0.20 per share associated with the integration of the Top-Flite operations. Excluding these charges, the Company’s pro forma fully diluted earnings per share for the first nine months of 2005 would have been $0.60, as compared to pro forma fully diluted earnings per share of $0.47 for the first nine months of 2004.
The year-to-date gains in earnings were tempered by increases in selling costs that were partially offset by savings in other operating areas. These increased selling costs reflect increased advertising and promotional expense and increased tour expense. The planned increase in selling expense for 2005 was intended to reinvigorate the Company’s business following disappointing results in 2004, and the Company believes its investment in these activities has contributed to the increase in sales in 2005.
“We are pleased with our third quarter top line results, but know we can do better in profitability,” commented George Fellows, President and CEO. “As announced on September 29th, we have taken actions to lower costs while improving our internal processes. These actions are expected to generate savings in 2006 of between $50 and $60 million across the board. While a portion of these savings will be reinvested in growth initiatives, a majority will positively impact profitability. Our next step is to re-examine gross margins in an effort to further reduce costs while maintaining our high quality standards. We believe these actions along with improved and focused marketing will allow us to maximize shareholder value.”
Callaway shares rose slightly to $13.45 in after-hours trade on Inet after closing at $13.34 on the New York Stock Exchange
Callaway Golf www.callawaygolf.com