Callaway Golf, the parent company of Callaway, Odyssey, Ben Hogan and Top-Flite, posted revenue of $934.6 million in 2004, an increase of 14.8%, but despite the increase in revenue, the Carlsbad company posted a net loss for the year of $10.1 million, compared with net income in 2003 of $45.5 million.
Callaway acknowledged that the results reflected price cuts initiated by the company to reduce inventory in preparation for 2005 product launches.
“Our fourth quarter results reflect the pricing initiatives taken mid-year, to reduce inventory levels at retail prior to the start of 2005,” said William C. Baker, Chairman and CEO. “Reports from the field indicate that our efforts have met with success, and we enter 2005 in far better position than six months ago. In addition to correcting specific channel inventory issues, we continue to pull together as a team and evaluate every aspect of the business. Fortunately, our brands are strong, and we are excited about our new product introductions for 2005.”
“We have a wide range of new products across our brands for 2005,” reported Brad Holiday, senior executive vice president and chief financial officer. “In addition to the Callaway Golf® Heavenwood® Hybrids, Big Bertha® Fusion® Irons, and the Odyssey® White Steel™ putters launched in late 2004, we have recently launched our new Big Bertha Titanium 454 Driver, X-18 and X-18™ Pro Series Irons, and the HX® Hot Golf Ball. These products are selling into golf shops at a good pace, and will be supported by marketing plans developed in conjunction with our new advertising agency, Young & Rubicam.”
“At the same time, Top-Flite and Ben Hogan are launching their first families of new products developed since joining forces with Callaway Golf in late 2003,” continued Mr. Holiday. “Those new products for 2005 include several new Top-Flite® golf ball models, as well as the Ben Hogan® Big Ben® C.S3™ Drivers, Big Ben C455™ Fairway Woods, BH-5™ and BH-5 Offset Irons, Ben Hogan Sure Out® Wedges, Ben Hogan by Bettinardi The Hawk™ Putters, and the Hogan Tour Deep™ Golf Ball. We are also rolling out a new branding icon and market position for the Top-Flite brand in the marketplace. Most of these new Top-Flite and Ben Hogan products have already started shipping to retailers.”
The 2004 bottom line included net integration charges related to the Sept. 2003 acquisition of Top-Flite Golf, which total $17.5 million (after posting net integration charges of $16.2 million in 2003 as well). Without the charges, the company would have posted net income in 2004 of $7.4 million. However, excluding Top-Flite entirely, Callaway Golf’s revenue would have been $722.8 million, a decrease of 6.6 percent, and its net income would have been $20.8 million, a drop of 70.5 percent. It would have been the fourth consecutive year that Callaway and Odyssey had shown a drop in revenue.
The Ben Hogan and Top-Flite brands, which formed the core of Top-Flite Golf Co. before Callaway purchased it out of bankruptcy, posted a net loss of $13.4 million in 2004, on sales of $211.8 million (Callaway did not furnish 2003 year-end numbers for Top-Flite Golf).
Full-year sales of woods were $238.6 million for the entire company, a decrease of 5.5 percent. At the same time, Callaway posted sales of irons in 2004 of $259.1 million, a decrease of 7.7 percent. Sales of putters fell 29.6 percent to $100.5 million, while sales of golf balls grew by 76.2 percent to $105.1 million.
Following the release of the year end figures Callaway announced that it has engaged the Chicago-based global executive search firm Heidrick & Struggles to assist the company in its search for a new Chief Executive Officer.
William Baker, Callaway Golf’s interim CEO, said, “I am confident Heidrick & Struggles is the best choice to conduct this search. It is a company with global reach that has compiled an exceptional track record over the years for providing high quality executive candidates to publicly traded companies. An added advantage is that Ron Gerevas, who has been an important part of Heidrick & Struggles’s success, is based in Southern California and is familiar with Callaway Golf’s history and corporate culture.”
Callaway Golf Company www.callawaygolf.com