CARLSBAD, Calif., May 4, 2017 /PRNewswire/ --
- First quarter 2017 net sales of $309
million, a 13% increase compared to the first quarter of
2016.
- First quarter 2017 non-GAAP pre-tax income (which excludes
non-recurring OGIO transaction and transition expenses) of
$43 million, an increase of 8%
compared to the first quarter of 2016. On a GAAP basis,
pre-tax income was $39 million for
the first quarter of 2017.
- Full year 2017 sales guidance increased by $45 - $50 million to $960
- $980 million, compared to prior guidance of $910 - $935 million.
- Full year 2017 non-GAAP earnings per share guidance increased
$0.10 per share to $0.31 - $0.37, compared to prior guidance of
$0.21 - $0.27. The non-GAAP guidance
excludes the non-recurring OGIO expenses.
Callaway Golf Company (NYSE:ELY) announced today its first
quarter 2017 financial results and increased its full year 2017
sales and earnings guidance.
In the first quarter of 2017, as compared to the same period in
2016, the Company's net sales increased $35
million (13%) to $309 million
and non-GAAP pre-tax income (which excludes $4 million in non-recurring transaction and
transition costs related to the OGIO acquisition) increased
$3 million (8%) to $43 million. These results reflect the Company's
continued brand momentum and continued execution of its strategy to
grow market share in its core golf equipment business and in
tangential areas. As a result of this better than expected first
quarter, the Company increased its full year sales guidance by
$45 million - $50 million to
$960 million - $980 million as
compared to its prior guidance of $910
million - $935 million. The Company also increased its full
year non-GAAP earnings per share guidance by $0.10 to $0.31 - $0.37 compared to prior guidance of $0.21 - $0.27. The full year non-GAAP guidance
excludes an estimated $7 million of
non-recurring OGIO transaction and transition expenses.
"It has been a very strong start to 2017," commented
Chip Brewer, President and Chief
Executive Officer of Callaway Golf Company. "Sales of our new
products, including the EPIC driver and new Chrome Soft X golf
ball, have exceeded our expectations. Business around the globe
remains very strong with all major regions reporting sales growth
and market share gains. And our new business ventures, namely the
apparel joint venture in Japan and
the recently acquired OGIO business, are performing ahead of plan.
Furthermore, our liquidity and financial flexibility remain strong
even with the cash outlay earlier this year for the purchase of
OGIO. Overall, I am very pleased with how our business is
performing and am cautiously optimistic for the balance of the
year."
GAAP and Non-GAAP Results
In addition to the Company's results prepared in accordance
with GAAP, the Company provided information on a non-GAAP basis.
The purpose of this non-GAAP presentation is to provide additional
information to investors regarding the underlying performance of
the Company's business without these non-recurring items and on a
more comparable tax basis.
This non-GAAP information presents the Company's financial
results for the first quarter of 2017 excluding the non-recurring
transaction and transition expenses related to the OGIO
acquisition. In addition, because of the Company's prior deferred
tax valuation allowance, the Company did not recognize U.S. income
tax during the first quarter of 2016 and its income tax provision
and after-tax income and earnings are therefore not calculated on
the same basis as in the first quarter of 2017. In order to make
2016 more comparable to 2017, the Company has presented 2016
results on a non-GAAP basis by applying an assumed statutory income
tax rate of 38.5% as compared to the actual first quarter 2016
effective tax rate of 3.5%. The valuation allowance was reversed in
the fourth quarter of 2016. Excluding the reversal, the Company's
full year 2016 effective tax rate was 41.1%.
The manner in which this non-GAAP information is derived is
discussed in more detail toward the end of this release, and the
Company has provided in the tables to this release a reconciliation
of the non-GAAP information to the most directly comparable GAAP
information.
Summary of First Quarter 2017 Financial Results
The Company announced the following GAAP and non-GAAP financial
results for the first quarter of 2017 (in millions, except
eps):
2017 RESULTS
(GAAP)
|
|
NON-GAAP
PRESENTATION
|
|
Q1
2017
|
Q1
2016
|
Change
|
|
Q1 2017
non-GAAP
|
Q1 2016
non-GAAP
|
Change
|
Net Sales
|
$309
|
$274
|
$35
|
|
$309
|
$274
|
$35
|
Gross Profit/
% of Sales
|
$148
47.8%
|
$132
48.3%
|
$16
(50) b.p.
|
|
$148
47.8%
|
$132
48.3%
|
$16
(50) b.p.
|
Operating
Expenses
|
$104
|
$87
|
$17
|
|
$100
|
$87
|
$13
|
Pre-Tax
Income/(loss)
|
$39
|
$40
|
($1)
|
|
$43
|
$40
|
$3
|
Income Tax
Provision/(Benefit)
|
$13
|
$1
|
$12
|
|
$15
|
$15
|
$0
|
Net Income
|
$26
|
$38
|
($12)
|
|
$28
|
$24
|
$4
|
EPS
|
$0.27
|
$0.40
|
($0.13)
|
|
$0.30
|
$0.26
|
$0.04
|
For the first quarter of 2017, the Company's net sales increased
$35 million to $309 million compared to $274 million for the same period in 2016. The
increase in net sales is attributable to the strength of the
Company's 2017 product line, including an exceptionally strong
launch of the EPIC driver and fairway woods as well as increased
golf ball sales, including the new Chrome Soft X ball, which has
also exceeded expectations. In addition, net sales of gear and
accessories increased significantly as a result of the Company's
acquisition of OGIO in the first quarter of 2017 and the new
apparel joint venture in Japan,
which was formed in the third quarter of 2016. Net sales increased
in all major regions and reflected market share gains in those
regions.
For the first quarter of 2017, the Company's gross margin of
47.8% was better than the Company expected as a result of better
pricing and mix of products sold. The 50 basis point decrease
compared to 2016 gross margins of 48.3% reflects the different
economics of the apparel joint venture and the OGIO business, which
have lower gross margins and lower relative operating expenses
(with overall higher operating margins) as compared to the
Company's golf equipment business.
Operating expenses increased $17
million to $104 million in the
first quarter of 2017 compared to $87
million for the same period in 2016. This increase is
primarily due to the addition in 2017 of operating expenses from
the Japan joint venture and the
consolidation of OGIO, as well as $4
million in non-recurring OGIO transaction and transition
expenses.
First quarter 2017 earnings per share was $0.27, compared to $0.40 for the first quarter of 2016. The
decrease on a GAAP basis was caused by the $4 million ($0.03
per share) OGIO transaction and transition expenses in the first
quarter of 2017 and the difference in effective tax rates. In
the first quarter of 2016, the Company did not recognize U.S.
income taxes due to the Company's deferred tax valuation allowance
that existed at that time. The valuation allowance was reversed in
the fourth quarter of 2016 and the Company therefore recognized
U.S. income taxes in the first quarter of 2017. On a non-GAAP
basis, which excludes the impact of the non-recurring OGIO
transaction and transition expenses and applies a statutory tax
rate of 38.5% to 2016 pre-tax income as discussed above, the
Company would have reported earnings per share for the first
quarter of 2017 of $0.30, compared to
earnings per share of $0.26 for the
first quarter of 2016.
Business Outlook for 2017
Basis for 2017 Non-GAAP Estimates. The Company's 2017
non-GAAP estimates exclude non-recurring transaction and transition
expenses related to the OGIO acquisition, which are estimated to be
approximately $7 million for full
year 2017. The amount incurred in the first quarter of 2017
was $4 million, which was in line
with the Company's expectations.
Basis for 2016 Pro Forma Results. In order to make
the 2017 guidance more comparable to 2016, as discussed above, the
Company has presented 2016 results on a pro forma basis by
excluding from 2016 the prior $0.11
per share gain from the sale of a small portion of the Company's
Topgolf investment. Furthermore, the Company excluded from full
year 2016 the $1.63 per share
non-recurring benefit from the reversal of the deferred tax
valuation allowance and calculated 2016 pro forma second quarter
earnings based upon an assumed statutory tax rate of
38.5%.
Full Year 2017
Given the Company's financial performance during the first
quarter of 2017, the Company is increasing its full year financial
guidance as follows:
|
Revised
2017
GAAP
Estimate
|
Revised
2017
Non-GAAP
Estimate
|
Previous
2017
Non-GAAP
Estimate
|
2016
Pro Forma
Results
|
Net Sales
|
$960 - $980
million
|
$960 - $980
million
|
$910 - $935
million
|
$871
million
|
Gross
Margins
|
45.2%
|
45.2%
|
44.2%
|
44.2%
|
Operating
Expenses
|
$390
million
|
$383
million
|
$367
million
|
$341
million
|
Earnings Per
Share
|
$0.27 -
$0.33
|
$0.31 -
$0.37
|
$0.21 -
$0.27
|
$0.24
|
The Company's revised 2017 net sales estimate of $960 million - $980 million represents an
increase of $45 million - $50 million
over its prior estimate. This would result in net sales
growth of 10% -13% in 2017 compared to 2016. Incremental
sales growth versus previous estimates is expected to be driven by
market share gains related to the Company's 2017 product line,
including the EPIC driver and fairway woods, and incremental sales
from the OGIO business and the Japan apparel joint venture. In addition, the
Company is currently estimating that year-over-year changes in
foreign currency exchange rates will have less of a negative impact
than originally estimated. The Company currently estimates that
changes in foreign currency rates will adversely affect projected
2017 net sales by approximately $16
million as compared to its prior estimate of $28 million.
The Company currently estimates that its 2017 non-GAAP gross
margin will improve 100 basis points from the prior estimate. This
increase is expected to be driven by continued favorable pricing,
mix and operational efficiencies.
The Company estimates that its 2017 non-GAAP operating expenses
will increase $16 million compared to
prior estimates. This increase in operating expenses reflects
increased variable costs related to higher sales and performance,
the impact of changes in foreign currency exchange rates, as well
as targeted investments in the core business.
The Company increased its non-GAAP earnings per share guidance
by $0.10 to $0.31 - $0.37 primarily due to the projected increase in
net sales and improved gross margins. The Company's 2017 earnings
per share estimates assume a tax rate of approximately 36% and a
base of 96 million shares.
Second Quarter 2017
The Company currently estimates the following results for the
second quarter of 2017:
|
Q2 2017
GAAP
Estimate
|
Q2 2017
Non-GAAP
Estimate
|
Q2 2016
Non-GAAP
Results
|
Net Sales
|
$290 - $300
million
|
$290 - 300
million
|
$246
million
|
Earnings Per
Share
|
$0.27 -
$0.30
|
$0.28 -
$0.31
|
$0.12
|
The Company expects sales growth of 18% - 22% in the second
quarter of 2017 compared to the same period in 2016. This projected
sales growth reflects anticipated growth in the core business as
well as growth from the Japan
apparel joint venture and the OGIO business. It is
anticipated that this growth will be partially offset by weaker
foreign currencies in the second quarter of 2017 compared to the
same period in 2016.
The Company's non-GAAP earnings per share for the second quarter
of 2017 is estimated to increase $0.16 -
$0.19 per share to $0.28 -
$0.31 compared to $0.12 for
the second quarter of 2016. This projected increase is due to
higher sales and stronger gross margins. The Company's 2017 second
quarter earnings per share estimates assume approximately 96
million shares, which is consistent with the second quarter of
2016.
Conference Call and Webcast
The Company will be holding a conference call at 2:00 p.m. PDT today to discuss the Company's
financial results, outlook and business. The call will be broadcast
live over the Internet and can be accessed at
http://ir.callawaygolf.com/. To listen to the call, and to access
the Company's presentation materials, please go to the website at
least 15 minutes before the call to register and for instructions
on how to access the broadcast. A replay of the conference call
will be available approximately three hours after the call ends,
and will remain available through 9:00 p.m.
PDT on Thursday, May 11,
2017. The replay may be accessed through the Internet at
http://ir.callawaygolf.com/.
Non-GAAP Information
The GAAP results contained in this press release and the
financial statement schedules attached to this press release have
been prepared in accordance with accounting principles generally
accepted in the United States
("GAAP"). To supplement the GAAP results, the Company has
provided certain non-GAAP financial information as follows:
Constant Currency Basis. The Company provided certain
information regarding the Company's financial results or projected
financial results on a "constant currency basis." This information
estimates the impact of changes in foreign currency rates on the
translation of the Company's current or projected future period
financial results as compared to the applicable comparable
period. This impact is derived by taking the current or
projected local currency results and translating them into U.S.
Dollars based upon the foreign currency exchange rates for the
applicable comparable period. It does not include any other effect
of changes in foreign currency rates on the Company's results or
business.
Adjusted EBITDA. The Company provides information
about its results excluding interest, taxes, and depreciation and
amortization expenses, as well as non-recurring Ogio transaction
and transition expenses and the second quarter 2016 gain realized
from the sale of a small portion of the Company's Topgolf
investment.
Other Adjustments. The Company presents certain of its
financial results (i) excluding tax benefits received from the
reversal of a significant portion of its deferred tax valuation
allowance, (ii) excluding gains from the sale of a small portion of
its Topgolf investment, (iii) excluding the non-recurring Ogio
expenses or (iv) by applying an assumed estimated statutory tax
rate of 38.5%.
In addition, the Company has included in the schedules to this
release a reconciliation of certain non-GAAP information to the
most directly correlated GAAP information. The non-GAAP
information presented in this release and related schedules should
not be considered in isolation or as a substitute for any measure
derived in accordance with GAAP. The non-GAAP information may also
be inconsistent with the manner in which similar measures are
derived or used by other companies. Management uses such
non-GAAP information for financial and operational decision-making
purposes and as a means to evaluate period-over-period comparisons
and in forecasting the Company's business going forward. Management
believes that the presentation of such non-GAAP information, when
considered in conjunction with the most directly comparable GAAP
information, provides additional useful comparative information for
investors in their assessment of the underlying performance of the
Company's business without regard to these items. The Company has
provided reconciling information in the attached schedules.
Forward-Looking Statements
Statements used in this press release that relate to future
plans, events, financial results, performance or prospects,
including statements relating to the Company's estimated 2017
sales, gross margins, operating expenses, and earnings per share
(or related tax rate and share count), the estimated impact from
changes in foreign currency rates, and the expected timing and
amount of expenses related to the integration of the OGIO
acquisition, are forward-looking statements as defined under the
Private Securities Litigation Reform Act of 1995. These statements
are based upon current information and expectations. Accurately
estimating the forward-looking statements is based upon various
risks and unknowns including any unfavorable changes in U.S. trade,
tax or other policies, including restrictions on imports or an
increase in import tariffs; delays, difficulties, or increased
costs in integrating the acquired OGIO business or implementing the
Company's growth strategy generally; consumer acceptance of and
demand for the Company's products; the level of promotional
activity in the marketplace; unfavorable weather conditions; future
consumer discretionary purchasing activity, which can be
significantly adversely affected by unfavorable economic or market
conditions; future retailer purchasing activity, which can be
significantly negatively affected by adverse industry conditions
and overall retail inventory levels; and future changes in foreign
currency exchange rates and the degree of effectiveness of the
Company's hedging programs. Actual results may differ materially
from those estimated or anticipated as a result of these risks and
unknowns or other risks and uncertainties, including continued
compliance with the terms of the Company's credit facilities;
delays, difficulties or increased costs in the supply of components
or commodities needed to manufacture the Company's products or in
manufacturing the Company's products; the ability to secure
professional tour player endorsements at reasonable costs; any rule
changes or other actions taken by the USGA or other golf
association that could have an adverse impact upon demand or supply
of the Company's products; a decrease in participation levels in
golf; and the effect of terrorist activity, armed conflict, natural
disasters or pandemic diseases on the economy generally, on the
level of demand for the Company's products or on the Company's
ability to manage its supply and delivery logistics in such an
environment. For additional information concerning these and other
risks and uncertainties that could affect these statements, the
golf industry, and the Company's business, see the Company's Annual
Report on Form 10-K for the year ended December 31, 2016 as well as other risks and
uncertainties detailed from time to time in the Company's reports
on Forms 10-K, 10-Q and 8-K subsequently filed with the Securities
and Exchange Commission. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date hereof. The Company undertakes no obligation to
republish revised forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
About Callaway Golf
Through an unwavering
commitment to innovation, Callaway Golf Company (NYSE:ELY) creates
products designed to make every golfer a better golfer. Callaway
Golf Company manufactures and sells golf clubs and golf balls, and
sells bags, accessories and apparel in the golf and lifestyle
categories, under the Callaway Golf®, Odyssey®, and OGIO brands
worldwide. For more information please visit
www.callawaygolf.com, www.odysseygolf.com and
www.ogio.com.
Contacts:
|
Brian
Lynch
|
|
Patrick
Burke
|
|
(760)
931-1771
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
|
(Unaudited)
|
(In
thousands)
|
|
|
March 31,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
47,989
|
|
|
|
$
|
125,975
|
|
Accounts receivable,
net
|
|
245,144
|
|
|
|
127,863
|
|
Inventories
|
|
179,020
|
|
|
|
189,400
|
|
Other current
assets
|
|
19,353
|
|
|
|
17,187
|
|
Total current
assets
|
|
491,506
|
|
|
|
460,425
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
59,847
|
|
|
|
54,475
|
|
Intangible assets,
net
|
|
171,336
|
|
|
|
114,324
|
|
Deferred taxes,
net
|
|
99,741
|
|
|
|
114,707
|
|
Investment in
golf-related ventures
|
|
48,997
|
|
|
|
48,997
|
|
Other
assets
|
|
8,519
|
|
|
|
8,354
|
|
Total
assets
|
|
$
|
879,946
|
|
|
|
$
|
801,282
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
138,266
|
|
|
|
$
|
132,521
|
|
Accrued employee
compensation and benefits
|
|
24,939
|
|
|
|
32,568
|
|
Asset-based credit
facilities
|
|
76,954
|
|
|
|
11,966
|
|
Accrued warranty
expense
|
|
5,945
|
|
|
|
5,395
|
|
Income tax
liability
|
|
2,788
|
|
|
|
4,404
|
|
Total current
liabilities
|
|
248,892
|
|
|
|
186,854
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
5,914
|
|
|
|
5,828
|
|
Total Callaway Golf
Company shareholders' equity
|
|
614,986
|
|
|
|
598,906
|
|
Non-controlling
interest in consolidated entity
|
|
10,154
|
|
|
|
9,694
|
|
Total liabilities and
shareholders' equity
|
|
$
|
879,946
|
|
|
|
$
|
801,282
|
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
Three Months
Ended
March 31,
|
|
2017
|
|
2016
|
Net sales
|
$
|
308,927
|
|
|
$
|
274,053
|
|
Cost of
sales
|
161,212
|
|
|
141,661
|
|
Gross
profit
|
147,715
|
|
|
132,392
|
|
Operating
expenses:
|
|
|
|
Selling
|
71,762
|
|
|
63,286
|
|
General and
administrative
|
22,864
|
|
|
15,544
|
|
Research and
development
|
8,882
|
|
|
8,234
|
|
Total operating
expenses
|
103,508
|
|
|
87,064
|
|
Income from
operations
|
44,207
|
|
|
45,328
|
|
Other expense,
net
|
(5,121)
|
|
|
(5,537)
|
|
Income before income
taxes
|
39,086
|
|
|
39,791
|
|
Income tax
provision
|
13,206
|
|
|
1,401
|
|
Net income
|
25,880
|
|
|
38,390
|
|
Less: Net income
attributable to non-controlling interests
|
191
|
|
|
—
|
|
Net income
attributable to Callaway Golf Company
|
$
|
25,689
|
|
|
$
|
38,390
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
|
0.27
|
|
|
$
|
0.41
|
|
Diluted
|
$
|
0.27
|
|
|
$
|
0.40
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
94,070
|
|
|
93,952
|
|
Diluted
|
95,948
|
|
|
95,424
|
|
|
|
|
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOW
|
(Unaudited)
|
(In
thousands)
|
|
|
Three Months
Ended
March 31,
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
25,880
|
|
|
$
|
38,390
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
4,319
|
|
|
4,157
|
|
Deferred taxes,
net
|
15,630
|
|
|
—
|
|
Share-based
compensation
|
3,218
|
|
|
2,194
|
|
Gain on disposal of
long-lived assets and deferred gain amortization
|
(34)
|
|
|
(270)
|
|
Unrealized loss on
foreign currency forward contracts
|
3,111
|
|
|
—
|
|
Changes in assets and
liabilities
|
(114,929)
|
|
|
(115,930)
|
|
Net cash used in
operating activities
|
(62,805)
|
|
|
(71,459)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Acquisitions, net of
cash acquired
|
(58,629)
|
|
|
—
|
|
Capital
expenditures
|
(6,301)
|
|
|
(4,963)
|
|
Proceeds from sale of
property, plant and equipment
|
38
|
|
|
6
|
|
Proceeds from note
receivable
|
—
|
|
|
3,104
|
|
Investment in
golf-related ventures
|
—
|
|
|
(1,260)
|
|
Net cash used in
investing activities
|
(64,892)
|
|
|
(3,113)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
asset-based credit facilities, net
|
64,988
|
|
|
64,000
|
|
Acquisition of
treasury stock
|
(15,369)
|
|
|
(2,878)
|
|
Dividends
paid
|
(939)
|
|
|
(941)
|
|
Exercise of stock
options
|
484
|
|
|
384
|
|
Net cash provided by
financing activities
|
49,164
|
|
|
60,565
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
547
|
|
|
(658)
|
|
Net decrease in cash
and cash equivalents
|
(77,986)
|
|
|
(14,665)
|
|
Cash and cash
equivalents at beginning of period
|
125,975
|
|
|
49,801
|
|
Cash and cash
equivalents at end of period
|
$
|
47,989
|
|
|
$
|
35,136
|
|
CALLAWAY GOLF
COMPANY
|
Consolidated Net
Sales and Operating Segment Information
|
(Unaudited)
|
(In
thousands)
|
|
|
Net Sales by
Product Category
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs.
2016(2)
|
|
2017
|
|
2016(1)
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
Woods
|
$
|
107,575
|
|
|
$
|
89,248
|
|
|
$
|
18,327
|
|
|
20.5
|
%
|
|
21.1
|
%
|
Irons
|
59,011
|
|
|
75,600
|
|
|
(16,589)
|
|
|
(21.9)
|
%
|
|
(21.2)
|
%
|
Putters
|
27,005
|
|
|
30,213
|
|
|
(3,208)
|
|
|
(10.6)
|
%
|
|
(10.2)
|
%
|
Golf balls
|
48,224
|
|
|
41,416
|
|
|
6,808
|
|
|
16.4
|
%
|
|
16.8
|
%
|
Gear/Accessories/Other
|
67,112
|
|
|
37,576
|
|
|
29,536
|
|
|
78.6
|
%
|
|
79.2
|
%
|
|
$
|
308,927
|
|
|
$
|
274,053
|
|
|
$
|
34,874
|
|
|
12.7
|
%
|
|
13.3
|
%
|
(1) The
Company changed its operating segments as of January 1, 2017.
Accordingly, prior period amounts have been restated to conform
with the current period presentation.
|
(2)
Calculated by applying 2016 exchange rates to 2017 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by
Region
|
|
|
Three Months
Ended
March 31,
|
|
Growth
|
|
Non-GAAP
Constant
Currency
vs.
2016(1)
|
|
|
2017
|
|
2016
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
179,822
|
|
|
$
|
160,048
|
|
|
$
|
19,774
|
|
|
12.4
|
%
|
|
12.4
|
%
|
Europe
|
43,119
|
|
|
37,901
|
|
|
5,218
|
|
|
13.8
|
%
|
|
22.2
|
%
|
Japan
|
46,500
|
|
|
39,278
|
|
|
7,222
|
|
|
18.4
|
%
|
|
17.2
|
%
|
Rest of
Asia
|
18,322
|
|
|
15,808
|
|
|
2,514
|
|
|
15.9
|
%
|
|
12.3
|
%
|
Other foreign
countries
|
21,164
|
|
|
21,018
|
|
|
146
|
|
|
0.7
|
%
|
|
(1.9)
|
%
|
|
$
|
308,927
|
|
|
$
|
274,053
|
|
|
$
|
34,874
|
|
|
12.7
|
%
|
|
13.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2016 exchange rates to 2017 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
|
|
|
Three Months
Ended
March 31,
|
|
Growth/(Decline)
|
|
|
|
|
2017
|
|
2016(1)
|
|
Dollars
|
|
Percent
|
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
Golf Club
|
$
|
193,591
|
|
|
$
|
195,061
|
|
|
$
|
(1,470)
|
|
|
(0.8)
|
%
|
|
|
|
Golf Ball
|
48,224
|
|
|
41,416
|
|
|
6,808
|
|
|
16.4
|
%
|
|
|
|
Gear/Accessories/Other
|
67,112
|
|
|
37,576
|
|
|
29,536
|
|
|
78.6
|
%
|
|
|
|
|
$
|
308,927
|
|
|
$
|
274,053
|
|
|
$
|
34,874
|
|
|
12.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes:
|
|
|
|
|
|
|
|
|
|
Golf clubs
|
$
|
34,953
|
|
|
$
|
35,441
|
|
|
$
|
(488)
|
|
|
(1.4)
|
%
|
|
|
|
Golf balls
|
11,521
|
|
|
10,606
|
|
|
915
|
|
|
8.6
|
%
|
|
|
|
Gear/Accessories/Other
|
9,619
|
|
|
9,462
|
|
|
157
|
|
|
1.7
|
%
|
|
|
|
Reconciling
items(2)
|
(17,007)
|
|
|
(15,718)
|
|
|
(1,289)
|
|
|
(8.2)
|
%
|
|
|
|
|
$
|
39,086
|
|
|
$
|
39,791
|
|
|
$
|
(705)
|
|
|
(1.8)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
Company changed its operating segments as of January 1, 2017.
Accordingly, prior period amounts have been restated to conform
with the current period presentation.
|
(2)
Represents corporate general and administrative expenses and other
income (expense) not utilized by management in determining segment
profitability.
|
CALLAWAY GOLF
COMPANY
|
|
|
|
Supplemental
Financial Information and Non-GAAP Reconciliation
|
|
|
|
(Unaudited)
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2017
|
|
Three months ended
March 31, 2016
|
|
|
|
|
As
Reported
|
|
Ogio
Acquisition
Costs(1)
|
|
Non-GAAP
|
|
As
Reported
|
|
Non-Cash Tax
Adjustment(2)
|
|
Non-GAAP
|
|
|
|
Net sales
|
$
|
308,927
|
|
|
$
|
—
|
|
|
$
|
308,927
|
|
|
$
|
274,053
|
|
|
$
|
—
|
|
|
$
|
274,053
|
|
|
|
|
Gross
profit
|
147,715
|
|
|
—
|
|
|
147,715
|
|
|
132,392
|
|
|
—
|
|
|
132,392
|
|
|
|
|
% of sales
|
47.8
|
%
|
|
NA
|
|
|
47.8
|
%
|
|
48.3
|
%
|
|
NA
|
|
|
48.3
|
%
|
|
|
|
Operating
expenses
|
103,508
|
|
|
3,956
|
|
|
99,552
|
|
|
87,064
|
|
|
—
|
|
|
87,064
|
|
|
|
|
Income (loss) from
operations
|
44,207
|
|
|
(3,956)
|
|
|
48,163
|
|
|
45,328
|
|
|
—
|
|
|
45,328
|
|
|
|
|
Other expense,
net
|
(5,121)
|
|
|
—
|
|
|
(5,121)
|
|
|
(5,537)
|
|
|
—
|
|
|
(5,537)
|
|
|
|
|
Income (loss) before
income taxes
|
39,086
|
|
|
(3,956)
|
|
|
43,042
|
|
|
39,791
|
|
|
—
|
|
|
39,791
|
|
|
|
|
Income tax provision
(benefit)
|
13,206
|
|
|
(1,337)
|
|
|
14,543
|
|
|
1,401
|
|
|
13,919
|
|
|
15,320
|
|
|
|
|
Net income
(loss)
|
25,880
|
|
|
(2,619)
|
|
|
28,499
|
|
|
38,390
|
|
|
(13,919)
|
|
|
24,471
|
|
|
|
|
Less: Net income
attributable to non-controlling interests
|
191
|
|
|
—
|
|
|
191
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Net income (loss)
attributable to Callaway Golf Company
|
$
|
25,689
|
|
|
$
|
(2,619)
|
|
|
$
|
28,308
|
|
|
$
|
38,390
|
|
|
$
|
(13,919)
|
|
|
$
|
24,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
|
0.27
|
|
|
$
|
(0.03)
|
|
|
$
|
0.30
|
|
|
$
|
0.40
|
|
|
$
|
(0.14)
|
|
|
$
|
0.26
|
|
|
|
|
Weighted-average
shares outstanding:
|
95,948
|
|
|
95,948
|
|
|
95,948
|
|
|
95,424
|
|
|
95,424
|
|
|
95,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Represents transaction costs as well as one-time transition costs
associated with the acquisition of Ogio International, Inc in
January 2017.
|
|
|
(2) The
Company had a valuation allowance on its U.S. deferred tax assets
in the first quarter of 2016, which resulted in minimal U.S. tax
expense for the quarter. In the fourth quarter of 2016, the Company
reversed a significant portion of the valuation allowance. For
comparability to the first quarter of 2017, the Company applied an
estimated statutory tax rate of 38.5% to calculate pro-forma
results for the first quarter of 2016.
|
|
|
|
2017 Trailing
Twelve Month Adjusted EBITDA
|
|
2016 Trailing
Twelve Month Adjusted EBITDA
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
March
31,
|
|
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
March
31,
|
|
|
|
2016
|
|
2016
|
|
2016
|
|
2017
|
|
Total
|
|
2015
|
|
2015
|
|
2015
|
|
2016
|
|
Total
|
Net income
(loss)
|
$
|
34,105
|
|
|
$
|
(5,866)
|
|
|
$
|
123,271
|
|
|
$
|
25,689
|
|
|
$
|
177,199
|
|
|
$
|
12,818
|
|
|
$
|
(3,617)
|
|
|
$
|
(30,452)
|
|
|
$
|
38,390
|
|
|
$
|
17,139
|
|
Interest expense,
net
|
347
|
|
|
431
|
|
|
348
|
|
|
715
|
|
|
1,841
|
|
|
1,936
|
|
|
3,520
|
|
|
868
|
|
|
621
|
|
|
6,945
|
|
Income tax
provision
|
1,937
|
|
|
1,294
|
|
|
(137,193)
|
|
|
13,206
|
|
|
(120,756)
|
|
|
1,817
|
|
|
1,547
|
|
|
493
|
|
|
1,401
|
|
|
5,258
|
|
Depreciation and
amortization expense
|
4,180
|
|
|
4,204
|
|
|
4,045
|
|
|
4,319
|
|
|
16,748
|
|
|
4,454
|
|
|
4,193
|
|
|
4,029
|
|
|
4,157
|
|
|
16,833
|
|
EBITDA
|
$
|
40,569
|
|
|
$
|
63
|
|
|
$
|
(9,529)
|
|
|
$
|
43,929
|
|
|
$
|
75,032
|
|
|
$
|
21,025
|
|
|
$
|
5,643
|
|
|
$
|
(25,062)
|
|
|
$
|
44,569
|
|
|
$
|
46,175
|
|
Gain on sale of
Topgolf investments
|
(17,662)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,662)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Ogio acquisition
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
3,956
|
|
|
3,956
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
22,907
|
|
|
$
|
63
|
|
|
$
|
(9,529)
|
|
|
$
|
47,885
|
|
|
$
|
61,326
|
|
|
$
|
21,025
|
|
|
$
|
5,643
|
|
|
$
|
(25,062)
|
|
|
$
|
44,569
|
|
|
$
|
46,175
|
|
CALLAWAY GOLF
COMPANY
|
Reconciliation of
Non-GAAP 2016 Results
|
(Unaudited)
|
(In
thousands)
|
|
|
Three Months Ended
June 30, 2016
|
|
As
Reported
|
|
Topgolf
Gain(1)
|
|
Non-Cash
Tax
Adjustment(2)
|
|
Pro-Forma(3)
|
Net sales
|
$
|
245,594
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
245,594
|
|
Gross
profit
|
110,633
|
|
|
—
|
|
|
—
|
|
|
110,633
|
|
% of sales
|
45.0
|
%
|
|
—
|
|
|
—
|
|
|
45.0
|
%
|
Operating
expenses
|
89,765
|
|
|
—
|
|
|
—
|
|
|
89,765
|
|
Income from
operations
|
20,868
|
|
|
—
|
|
|
—
|
|
|
20,868
|
|
Other income
(expense), net
|
15,174
|
|
|
17,662
|
|
|
—
|
|
|
(2,488)
|
|
Income before income
taxes
|
36,042
|
|
|
17,662
|
|
|
—
|
|
|
18,380
|
|
Income tax provision
(benefit)
|
1,937
|
|
|
7,188
|
|
|
(12,327)
|
|
|
7,076
|
|
Net income
|
$
|
34,105
|
|
|
$
|
10,474
|
|
|
$
|
12,327
|
|
|
$
|
11,304
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share:
|
$
|
0.36
|
|
|
$
|
0.11
|
|
|
$
|
0.13
|
|
|
$
|
0.12
|
|
Weighted-average
shares outstanding:
|
95,893
|
|
|
95,893
|
|
|
95,893
|
|
|
95,893
|
|
|
|
|
|
|
|
|
|
(1) Represents a gain
on the sale of a small portion of the Company's Topgolf investment
as well as the income tax impact on the gain due to the reversal of
the Company's deferred tax valuation allowance in Q4 of
2016.
|
(2) Effect of
applying a 38.5% statutory tax rate to derive Non-GAAP
Results.
|
(3) The Company had a
valuation allowance on its U.S. deferred tax assets in the second
quarter of 2016, which resulted in minimal U.S. tax expense for the
quarter. In the fourth quarter of 2016, the Company reversed a
significant portion of the valuation allowance. For comparability
to the second quarter business outlook for 2017, the Company
applied an estimated statutory tax rate of 38.5% to calculate
Non-GAAP Results for the second quarter of 2016.
|
|
Year Ended
December 31, 2016
|
|
As
Reported
|
|
Release of
Tax VA(1)
|
|
Topgolf
Gain(2)
|
|
Pro-Forma(3)
|
Net sales
|
$
|
871,192
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
871,192
|
|
Gross
profit
|
385,011
|
|
|
—
|
|
|
—
|
|
|
385,011
|
|
% of sales
|
44.2
|
%
|
|
—
|
|
|
—
|
|
|
44.2
|
%
|
Operating
expenses
|
340,843
|
|
|
—
|
|
|
—
|
|
|
340,843
|
|
Income from
operations
|
44,168
|
|
|
—
|
|
|
—
|
|
|
44,168
|
|
Other income
(expense), net
|
14,225
|
|
|
|
|
17,662
|
|
|
(3,437)
|
|
Income before income
taxes
|
58,393
|
|
|
—
|
|
|
17,662
|
|
|
40,731
|
|
Income tax provision
(benefit)
|
(132,561)
|
|
|
(156,588)
|
|
|
7,188
|
|
|
16,839
|
|
Net income
|
190,954
|
|
|
156,588
|
|
|
10,474
|
|
|
23,892
|
|
Less: Net income
attributable to non-controlling interests
|
1,054
|
|
|
—
|
|
|
—
|
|
|
1,054
|
|
Net income
attributable to Callaway Golf Company
|
$
|
189,900
|
|
|
$
|
156,588
|
|
|
$
|
10,474
|
|
|
$
|
22,838
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share:
|
$
|
1.98
|
|
|
1.63
|
|
|
$
|
0.11
|
|
|
$
|
0.24
|
|
Weighted-average
shares outstanding:
|
95,845
|
|
|
95,845
|
|
|
95,845
|
|
|
95,845
|
|
|
|
|
|
|
|
|
|
(1) Non-cash
tax benefit due to the reversal of a significant portion of the
Company's deferred tax valuation allowance.
|
|
(2) Represents a gain
on the sale of a small portion of the Company's Topgolf investment
as well as the income tax impact on the gain due to the reversal of
the Company's deferred tax valuation allowance in Q4 of
2016.
|
(3) In order to make
the 2017 guidance more comparable to 2016 with regard to the
underlying performance of the Company's business, the Company has
recast its 2016 results on a pro-forma basis. The 2016 Non-GAAP
Results exclude (i) the $156.6 million ($1.63 per share) benefit
from the reversal of the deferred tax valuation allowance, and (ii)
the $10.5 million ($0.11 per share) after-tax Topgolf
gain.
|
![Callaway Golf Company Logo. (PRNewsFoto/Callaway Golf Company) (PRNewsfoto/Callaway Golf Company) Callaway Golf Company Logo. (PRNewsFoto/Callaway Golf Company) (PRNewsfoto/Callaway Golf Company)](https://mma.prnewswire.com/media/464637/Callaway_Golf_Company_Logo.jpg)
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SOURCE Callaway Golf Company