Carlsbad, United States: Callaway Golf Company has announced its first nine months and third quarter 2014 financial results, reflecting its continued improvements in market share, Tour success, and operating efficiencies, as well as its anticipated return to profitability for the full year, which would be the first time since 2008.
Despite softer than expected market conditions, Callaway, a Full Business Member of the Asian Golf Industry Federation, reported for the first nine months of 2014 a 5% increase in net sales driven by growth in woods (+6%), irons (+9%), golf balls (+5%) and accessories and other (+3%).
In addition, the company’s improvements in gross margins (+280 basis points) and effective cost management (operating expenses were flat despite incremental investments in Tour and marketing) allowed the company to offset an almost US$10 million increase in other expense, resulting primarily from adverse changes in foreign currency contract values.
Chip Brewer, President and Chief Executive Officer, said: “Overall, we are pleased with our results for the third quarter and first nine months. While challenging market conditions have made sales growth in the first nine months of this year more difficult than we would have liked, we are encouraged by our market share gains and are confident that we are outperforming the industry.
“We are also benefitting from the many actions we have taken these past two years to improve our operating efficiencies, as we have been able to achieve significant improvements in profitability despite the effect of the headwinds on top-line performance.
“We believe we are well-positioned for the balance of 2014 and for 2015. Our brand continues to build momentum, our organisation is strengthening, and we have an incredible product pipeline, including the Big Bertha Alpha Drivers, the Big Bertha Irons and Hybrids and our new Japan line of Big Bertha Beta Irons and Hybrids that are launching in the fourth quarter.
“As a result, we expect our recovery to continue with steady improvement in profitability.”
The 2014 results also benefitted from a US$10 million decrease in pre-tax charges related to the cost-reduction initiatives that were completed in 2013. As a result, during the first nine months of 2014, income from operations doubled to US$70 million and fully diluted earnings per share increased 83% to US$0.66.
For the third quarter of 2014, sales were US$169 million, a decrease of 5% compared to last year due to continued industry softness and the timing of new product launches compared to the same period last year.
This decline in net sales, however, was more than offset by a 540 basis point improvement in gross margins, an US$8 million improvement in operating expenses, and a US$5 million improvement in other income due to positive changes in foreign currency contract values.
As a result, income from operations improved to a loss of US$3 million compared to a loss of US$17 million for the third quarter last year and loss per share improved to a loss of US$0.01 compared to a loss of US$0.32 for the same period last year.
In 2014, first nine months sales increased 5% to US$752 million, compared to US$716 million in 2013; income from operations increased 100% to US$70 million, compared to US$35 million in 2013; earnings per share increased 83% to US$0.66, compared to US$0.36 in 2013.
In 2014, third quarter sales decreased 5% to US$169 million, compared to US$178 million in 2013; loss from operations improved to a loss of US$3 million compared to a loss of US$17 million in 2013; earnings per share improved to a loss of US$0.01 compared to a loss of US$0.32 in 2013.