Company (NYSE:ELY) has announced consolidated net sales for the quarter ended 31st March of $364 million, net income of $41 million, and fully diluted earnings per share of $0.59. Reported net income and earnings per share were affected by $3 million and $0.05, respectively, due to charges associated with the integration of the Top-Flite operations.
Excluding these charges, the Company’s pro forma net income was $44 million, an increase of 3% compared to the first quarter in 2003 and a record first quarter for the Company, and pro forma fully diluted earnings per share were $0.64, the same as the prior year.
Reported net sales of $364 million included $297 million from core Callaway Golf and Odyssey branded products, an increase of 9% for these products over the first quarter of 2003 and a record for any quarter in the Company’s history. Reported net sales also included $67 million from newly acquired Top-Flite and Ben Hogan branded products.
Reported net income of $41 million included $43 million from Callaway Golf and Odyssey branded products, an increase of 2% over the prior year. Reported net income also included $551,000 from Top-Flite and Ben Hogan branded products and $3 million in integration charges.
Reported fully diluted earnings per share of $0.59 included $0.63 from Callaway Golf and Odyssey branded products as compared to $0.64 for the comparable period in the prior year. Reported fully diluted earnings per share also included $0.01 from Top-Flite and Ben Hogan branded products and $0.05 in integration charges.
“I am very pleased with our results for the first quarter, with record net sales and net income in our core Callaway Golf business,” said Ron Drapeau, chairman and CEO. “In turn, we increased our investment in programs directed at achieving our operational objectives of eliminating the losses from the Callaway Golf ball business, growing our woods business and restructuring the Top-Flite Golf operations. We made progress on all fronts. In our consolidated results you would find that Callaway Golf branded golf ball sales increased $14 million, or 100%, over the prior year and delivered a profit for the quarter; sales of Callaway Golf branded woods increased $30 million dollars, or 32%, over the prior year; and Top-Flite, excluding integration charges, was profitable. We are very pleased to be hitting our major goals so early in the year; and remain on track to hit our overall growth targets for 2004.”
Commenting on the results, Brad Holiday, senior executive vice president and chief financial officer stated, “We predicted for 2004 that we could both invest in our business and also achieve improved top line and bottom line results for the year. The benefits of our investments in Top-Flite and pro tour spending will continue to be seen over the remainder of the year, keeping us on track to hit our guidance.”
In accordance with the Company’s dividend practice, the next dividend will be determined by the Board of Directors at its May meeting.
“We are encouraged by early sell in of our new products at retail, improvements in rounds of golf played in the United States, and what appears to be a recovering economy here at home,” continued Mr. Drapeau. “Based on those external factors and the results we have achieved in the first quarter, we reiterate our previous guidance of net sales for 2004 of approximately $1.03 billion, plus or minus 3%, with fully diluted earnings per share between $0.82 and $0.97, including charges associated with the integration of the Top-Flite operations (about $35 million pre-tax, or $0.33 in earnings per share).”
Callaway Golf Company www.callawaygolf.com