CARLSBAD, Calif., April 26, 2018 /PRNewswire/ -- Callaway Golf
Company (NYSE:ELY) announced today record sales and earnings for
the first quarter of 2018 and significantly increased its full year
2018 sales and earnings guidance.
In the first quarter of 2018, as compared to the same period in
2017, the Company's net sales increased $94
million (31%) to $403 million,
and earnings per share increased $0.38 to $0.65. These record financial results were
driven by increased sales in all operating segments, all major
product categories and all major regions. For the first quarter of
2018, compared to the first quarter of 2017, net sales increased as
follows:
Woods
|
+ 19.7%
|
U.S.
|
+ 31.9%
|
Irons
|
+ 61.3%
|
Europe
|
+ 14.8%
|
Putters
|
+ 23.8%
|
Japan
|
+ 49.0%
|
Golf Balls
|
+ 13.9%
|
Rest of
Asia
|
+ 35.0%
|
Gear &
Other
|
+ 35.3%
|
Other
|
+
7.5%
|
As a result of this better than expected first quarter, the
Company increased its full year 2018 sales guidance to $1,170 million - $1,185
million as compared to its prior guidance of $1,115 million - $1,135
million. The Company also increased its full year 2018 GAAP
earnings per share guidance to $0.77
- $0.82 compared to prior guidance of
$0.64 - $0.70.
"It has been a strong start to 2018," commented Chip Brewer, President and Chief Executive
Officer of Callaway Golf Company. "Sales across our entire product
line, including the Rogue line of woods and irons as well as the
new Chrome Soft golf balls, are off to a strong start and we also
benefitted from improved foreign exchange rates and market
conditions. As a result, our EBITDA increased 95% during the first
quarter. Business around the globe remains strong with all
major regions reporting significant sales growth and our new
businesses are performing at or above plan. While I am
mindful that the first quarter generally represents the initial
sell-in for the new golf season, I am pleased overall 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 non-recurring items. 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. 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 2018 Financial Results
The Company announced the following GAAP and non-GAAP financial
results for the first quarter of 2018 (in millions, except
EPS):
2018 RESULTS
(GAAP)
|
|
NON-GAAP
PRESENTATION
|
|
Q1
2018
|
Q1 2017
|
Change
|
|
Q1
2018 GAAP
|
Q1 2017
non-GAAP
|
Change
|
Net Sales
|
$403
|
$309
|
$94
|
|
$403
|
$309
|
$94
|
Gross Profit/
% of Sales
|
$200 49.7%
|
$148 47.8%
|
$52 190
b.p.
|
|
$200 49.7%
|
$148 47.8%
|
$52 190
b.p.
|
Operating
Expenses
|
$114
|
$104
|
$10
|
|
$114
|
$100
|
$14
|
Pre-Tax
Income
|
$80
|
$39
|
$41
|
|
$80
|
$43
|
$37
|
Income Tax
Provision
|
$17
|
$13
|
$4
|
|
$17
|
$15
|
$2
|
Net Income
|
$63
|
$26
|
$37
|
|
$63
|
$28
|
$35
|
EPS
|
$0.65
|
$0.27
|
$0.38
|
|
$0.65
|
$0.30
|
$0.35
|
|
|
|
|
Q1 2018
|
Q1 2017
|
Change
|
|
|
|
|
EBITDA
|
$86
|
$44
|
$42
|
|
|
For the first quarter of 2018, the Company's net sales increased
$94 million (31%) to $403 million, compared to $309 million for the same period in 2017. Net
sales increased in all operating segments, in all regions and
across all major product categories. The increase in net sales is
attributable to the strength of the Company's 2018 product line and
continued brand momentum, to an $11
million favorable impact resulting from changes in foreign
currency rates, an increase in product launches during the first
quarter of 2018 versus 2017, and improved market conditions. In
addition, first quarter net sales of gear and accessories increased
significantly as a result of the Company's acquisition of
TravisMathew in the third quarter of 2017.
For the first quarter of 2018, the Company's gross margin
increased 190 basis points to 49.7% compared to 47.8% for the first
quarter of 2017. This increase reflects an overall increase
in average selling prices, the addition of the TravisMathew
business, which is accretive to gross margins, and the net
favorable impact of changes in foreign currency rates.
Operating expenses increased $10
million to $114 million in the
first quarter of 2018 compared to $104
million for the same period in 2017. This increase is
primarily due to the addition in 2018 of operating expenses from
the TravisMathew business as well as some variable expenses
associated with higher core business net sales.
First quarter 2018 earnings per share increased $0.38 (141%) to $0.65, which is a record first quarter for the
Company, compared to $0.27 for the
first quarter of 2017. On a non-GAAP basis, 2017 first
quarter earnings per share was $0.30,
which excludes $0.03 per share
related to the impact of the non-recurring OGIO transaction and
transition expenses. The increased earnings in 2018 reflect
the increased sales in the core business, the addition of the
TravisMathew business, improved gross margins and a lower tax rate
due to the tax reform in 2017.
Business Outlook for 2018
Basis for 2017 Non-GAAP Results. In order to make
the 2018 guidance more comparable to 2017, as discussed above, the
Company has presented 2017 results on a non-GAAP basis by excluding
from 2017 the non-recurring expenses related to the OGIO and
TravisMathew acquisitions ($0.07 per
share for the full year and $0.01 for
the second quarter). Furthermore, the Company excluded from full
year 2017 earnings per share certain non-cash, non-recurring tax
adjustments ($0.04 per share).
Full Year 2018
Given the Company's financial performance during the first
quarter of 2018, the Company is increasing its full year 2018
financial guidance as follows:
|
Revised
2018 GAAP Estimate
|
Previous
2018 GAAP Estimate
|
2017
Non-GAAP
Results
|
Net Sales
|
$1,170 - $1,185
million
|
$1,115 - $1,135
million
|
$1,049
million
|
Gross
Margins
|
47.0%
|
46.5%
|
46.0%
|
Operating
Expenses
|
$444
million
|
$426
million
|
$393
million
|
Earnings Per
Share
|
$0.77 -
$0.82
|
$0.64 -
$0.70
|
$0.53
|
The Company's revised 2018 net sales estimate of $1,170 million - $1,185
million represents an increase of $50 - 55 million over its prior estimate.
This would result in net sales growth of 12% -13% in 2018 compared
to 2017. The estimated incremental sales growth versus
previous estimates is expected to be driven by further increases in
the core business (currently estimated at 4-6% full year sales
growth compared to 2017, on a currency neutral basis), foreign
currency exchange rate impacts and increases in the TravisMathew
business. The increases in core business are expected to be
driven by the Rogue line of woods and irons, the new Chrome Soft
golf balls, including continued success of the Truvis golf balls,
and healthier market conditions. In addition, the Company is
currently estimating that year-over-year changes in foreign
currency exchange rates will have a more positive impact than
originally estimated. As a result of an overall strengthening of
foreign currencies during the first quarter, the Company currently
estimates that changes in foreign currency rates will positively
impact 2018 full year net sales by approximately $19 million.
The Company currently estimates that its 2018 gross margin will
improve 50 basis points from the prior estimate. This increase is
expected to be driven by foreign currency exchange and the increase
in the core business sales.
The Company estimates that its 2018 operating expenses will
increase $18 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 GAAP earnings per share guidance to
$0.77 - $0.82 primarily due to the projected increase in
net sales, an overall strengthening of foreign currencies, improved
gross margins and a lower estimated tax rate. The Company's 2018
earnings per share estimates currently assume a tax rate of
approximately 23% and a base of 97 million shares.
The cadence of the Company's golf equipment launches in 2018 is
skewed toward the first half of the year compared to 2017. As a
result, all of the Company's projected sales and earnings growth
for 2018 is expected to occur during the first half of the year.
Consistent with the Company's expectations at the start of the
year, the second half of the year is planned to decrease compared
to the same period in 2017. The Company's full year guidance
includes this projected second half decrease.
Second Quarter 2018
The Company currently estimates the following results for the
second quarter of 2018 compared to 2017 non-GAAP results:
|
Q2
2018 GAAP Estimate
|
Q2
2017 Non-GAAP
Results
|
Net Sales
|
$365 - $375
million
|
$305
million
|
Earnings Per
Share
|
$0.44 -
$0.48
|
$0.34
|
The Company expects sales growth of 20% - 23% in the second
quarter of 2018 compared to the same period in 2017. This projected
sales growth reflects anticipated growth in the core business, the
addition of the TravisMathew business and an overall strengthening
of foreign currencies. Changes in foreign currency exchange rates
are estimated to positively impact net sales by approximately
$5 million in the second quarter of
2018 compared to the same period in 2017.
The Company's GAAP earnings per share for the second quarter of
2018 is estimated to increase to $0.44 - $0.48
compared to $0.34 of non-GAAP
earnings per share for the second quarter of 2017. GAAP earnings
per share for the second quarter of 2017 was $0.33. This projected increase is due to
higher core business sales, the impact of the TravisMathew business
and favorable foreign currency exchange rates. The Company's 2018
second quarter earnings per share estimates assume approximately 97
million shares, which is consistent with the second quarter of
2017.
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 10, 2018. 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, depreciation and
amortization expenses, as well as non-recurring OGIO and
TravisMathew transaction-related 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 the 2017 non-recurring OGIO and
TravisMathew transaction-related expenses and (ii) excluding the
2017 non-cash, non-recurring tax adjustments.
In addition, the Company has included in the schedules to this
release a reconciliation of certain non-GAAP information to the
most directly comparable 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 2018
sales, gross margins, operating expenses, and earnings per share
(or related tax rate and share count), future industry or market
conditions, and the assumed benefits to be derived from investments
in the Company's core business or the OGIO and TravisMathew
acquisitions, 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 unanticipated delays, difficulties or
increased costs in integrating the acquired OGIO and TravisMathew
businesses or implementing the Company's growth strategy generally;
any changes in U.S. trade, tax or other policies, including impacts
of the 2017 Tax Cuts and Jobs Act or restrictions on imports or an
increase in import tariffs; 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, 2017 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®, OGIO and TravisMathew brands worldwide. For more
information please visit www.callawaygolf.com,
www.odysseygolf.com, www.OGIO.com, and
www.travismathew.com.
Contacts:
|
Brian
Lynch
|
|
Patrick
Burke
|
|
(760)
931-1771
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
|
(Unaudited)
|
(In
thousands)
|
|
|
March 31,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
38,718
|
|
|
|
$
|
85,674
|
|
Accounts receivable,
net
|
265,240
|
|
|
|
94,725
|
|
Inventories
|
262,290
|
|
|
|
262,486
|
|
Other current
assets
|
29,644
|
|
|
|
23,099
|
|
Total current
assets
|
595,892
|
|
|
|
465,984
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
72,881
|
|
|
|
70,227
|
|
Intangible assets,
net
|
282,185
|
|
|
|
282,187
|
|
Deferred taxes,
net
|
82,698
|
|
|
|
91,398
|
|
Investment in
golf-related ventures
|
70,777
|
|
|
|
70,495
|
|
Other
assets
|
11,115
|
|
|
|
10,866
|
|
Total
assets
|
$
|
1,115,548
|
|
|
|
$
|
991,157
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
181,779
|
|
|
|
$
|
176,127
|
|
Accrued employee
compensation and benefits
|
27,578
|
|
|
|
40,173
|
|
Asset-based credit
facilities
|
178,523
|
|
|
|
87,755
|
|
Accrued warranty
expense
|
7,311
|
|
|
|
6,657
|
|
Other current
liabilities
|
2,378
|
|
|
|
2,367
|
|
Income tax
liability
|
3,905
|
|
|
|
1,295
|
|
Total current
liabilities
|
401,474
|
|
|
|
314,374
|
|
|
|
|
|
|
Long-term
liabilities
|
17,563
|
|
|
|
17,408
|
|
Total Callaway Golf
Company shareholders' equity
|
686,302
|
|
|
|
649,631
|
|
Non-controlling
interest in consolidated entity
|
10,209
|
|
|
|
9,744
|
|
Total liabilities and
shareholders' equity
|
$
|
1,115,548
|
|
|
|
$
|
991,157
|
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
Three Months
Ended
March 31,
|
|
2018
|
|
2017
|
Net sales
|
$
|
403,191
|
|
|
$
|
308,927
|
|
Cost of
sales
|
202,729
|
|
|
161,212
|
|
Gross
profit
|
200,462
|
|
|
147,715
|
|
Operating
expenses:
|
|
|
|
Selling
|
82,960
|
|
|
71,762
|
|
General and
administrative
|
21,894
|
|
|
22,864
|
|
Research and
development
|
9,624
|
|
|
8,882
|
|
Total operating
expenses
|
114,478
|
|
|
103,508
|
|
Income from
operations
|
85,984
|
|
|
44,207
|
|
Other expense,
net
|
(6,034)
|
|
|
(5,121)
|
|
Income before income
taxes
|
79,950
|
|
|
39,086
|
|
Income tax
provision
|
17,219
|
|
|
13,206
|
|
Net income
|
62,731
|
|
|
25,880
|
|
Less: Net income
(loss) attributable to non-controlling interest
|
(124)
|
|
|
191
|
|
Net income
attributable to Callaway Golf Company
|
$
|
62,855
|
|
|
$
|
25,689
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$0.66
|
|
|
$0.27
|
|
Diluted
|
$0.65
|
|
|
$0.27
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
94,975
|
|
|
94,070
|
|
Diluted
|
97,038
|
|
|
95,948
|
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOW
|
(Unaudited)
|
(In
thousands)
|
|
|
Three Months
Ended
March 31,
|
|
2018
|
|
2017
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
62,731
|
|
|
$
|
25,880
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
4,737
|
|
|
4,319
|
|
Deferred taxes, net
|
14,035
|
|
|
15,630
|
|
Non-cash share-based compensation
|
2,999
|
|
|
3,218
|
|
Gain on disposal of long-lived assets
|
(3)
|
|
|
(34)
|
|
Unrealized losses on foreign currency
hedges
|
2,060
|
|
|
3,111
|
|
Changes
in assets and liabilities
|
(195,833)
|
|
|
(114,929)
|
|
Net cash used in
operating activities
|
(109,274)
|
|
|
(62,805)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(7,964)
|
|
|
(6,301)
|
|
Investments in golf related ventures
|
(282)
|
|
|
—
|
|
Acquisitions, net of cash acquired
|
—
|
|
|
(58,629)
|
|
Proceeds
from sales of property and equipment
|
—
|
|
|
38
|
|
Net cash used in
investing activities
|
(8,246)
|
|
|
(64,892)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds
from credit facilities, net
|
90,768
|
|
|
64,988
|
|
Repayments of long-term debt
|
(539)
|
|
|
—
|
|
Exercise
of stock options
|
752
|
|
|
484
|
|
Dividends paid, net
|
(954)
|
|
|
(939)
|
|
Acquisition of treasury stock
|
(20,123)
|
|
|
(15,369)
|
|
Net cash provided by
financing activities
|
69,904
|
|
|
49,164
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
660
|
|
|
547
|
|
Net decrease in cash
and cash equivalents
|
(46,956)
|
|
|
(77,986)
|
|
Cash and cash
equivalents at beginning of period
|
85,674
|
|
|
125,975
|
|
Cash and cash
equivalents at end of period
|
$
|
38,718
|
|
|
$
|
47,989
|
|
CALLAWAY GOLF
COMPANY
|
Consolidated Net
Sales and Operating Segment Information
|
(Unaudited)
|
(In
thousands)
|
|
|
Net Sales by
Product Category
|
|
Three Months
Ended
March 31,
|
|
Growth
|
|
Non-GAAP Constant Currency vs. 2017(1)
|
|
2018
|
|
2017
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net sales:
|
|
|
|
|
|
|
|
|
|
Woods
|
$
|
128,802
|
|
|
$
|
107,575
|
|
|
$
|
21,227
|
|
|
19.7%
|
|
16.4%
|
Irons
|
95,209
|
|
|
59,011
|
|
|
36,198
|
|
|
61.3%
|
|
57.3%
|
Putters
|
33,430
|
|
|
27,005
|
|
|
6,425
|
|
|
23.8%
|
|
18.9%
|
Golf balls
|
54,922
|
|
|
48,224
|
|
|
6,698
|
|
|
13.9%
|
|
11.5%
|
Gear/Accessories/Other
|
90,828
|
|
|
67,112
|
|
|
23,716
|
|
|
35.3%
|
|
31.7%
|
|
$
|
403,191
|
|
|
$
|
308,927
|
|
|
$
|
94,264
|
|
|
30.5%
|
|
27.0%
|
|
(1)
Calculated by applying 2017 exchange rates to 2018 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by
Region
|
|
Three Months
Ended
March 31,
|
|
Growth
|
|
Non-GAAP Constant Currency vs. 2017(1)
|
|
2018
|
|
2017(2)
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net Sales
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
235,161
|
|
|
$
|
178,264
|
|
|
$
|
56,897
|
|
|
31.9%
|
|
31.9%
|
Europe
|
51,202
|
|
|
44,617
|
|
|
6,585
|
|
|
14.8%
|
|
2.5%
|
Japan
|
69,275
|
|
|
46,502
|
|
|
22,773
|
|
|
49.0%
|
|
41.8%
|
Rest of
Asia
|
24,775
|
|
|
18,353
|
|
|
6,422
|
|
|
35.0%
|
|
27.5%
|
Other foreign
countries
|
22,778
|
|
|
21,191
|
|
|
1,587
|
|
|
7.5%
|
|
4.0%
|
|
$
|
403,191
|
|
|
$
|
308,927
|
|
|
$
|
94,264
|
|
|
30.5%
|
|
27.0%
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2017 exchange rates to 2018 reported sales
in regions outside the U.S.
|
(2) Prior
period amounts have been reclassified to conform to the current
year presentation of regional sales related to OGIO-branded
products.
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
|
|
Three Months
Ended
March 31,
|
|
Growth
|
|
|
|
2018
|
|
2017
|
|
Dollars
|
|
Percent
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
Golf Club
|
$
|
257,441
|
|
|
$
|
193,591
|
|
|
$
|
63,850
|
|
|
33.0%
|
|
|
Golf Ball
|
54,922
|
|
|
48,224
|
|
|
6,698
|
|
|
13.9%
|
|
|
Gear/Accessories/Other
|
90,828
|
|
|
67,112
|
|
|
23,716
|
|
|
35.3%
|
|
|
|
$
|
403,191
|
|
|
$
|
308,927
|
|
|
$
|
94,264
|
|
|
30.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes:
|
|
|
|
|
|
|
|
|
|
Golf clubs
|
$
|
65,831
|
|
|
$
|
34,953
|
|
|
$
|
30,878
|
|
|
88.3%
|
|
|
Golf balls
|
12,525
|
|
|
11,521
|
|
|
1,004
|
|
|
8.7%
|
|
|
Gear/Accessories/Other
|
20,337
|
|
|
9,619
|
|
|
10,718
|
|
|
111.4%
|
|
|
Reconciling
items(1)
|
(18,743)
|
|
|
(17,007)
|
|
|
(1,736)
|
|
|
-10.2%
|
|
|
|
$
|
79,950
|
|
|
$
|
39,086
|
|
|
$
|
40,864
|
|
|
104.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Represents corporate general and administrative expenses and other
income (expense) not utilized by management in determining segment
profitability.
|
CALLAWAY GOLF
COMPANY
|
Non-GAAP
Reconciliation and Supplemental Financial
Information
|
(Unaudited)
|
(In
thousands)
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
|
As
Reported
|
|
As
Reported
|
|
Ogio
Acquisition
Costs(1)
|
|
Non-GAAP
|
Net sales
|
$
|
403,191
|
|
|
$
|
308,927
|
|
|
$
|
—
|
|
|
$
|
308,927
|
|
Gross
profit
|
200,462
|
|
|
147,715
|
|
|
—
|
|
|
147,715
|
|
% of sales
|
49.7
|
%
|
|
47.8
|
%
|
|
—
|
|
|
47.8
|
%
|
Operating
expenses
|
114,478
|
|
|
103,508
|
|
|
3,956
|
|
|
99,552
|
|
Income (loss) from
operations
|
85,984
|
|
|
44,207
|
|
|
(3,956)
|
|
|
48,163
|
|
Other expense,
net
|
(6,034)
|
|
|
(5,121)
|
|
|
—
|
|
|
(5,121)
|
|
Income (loss) before
income taxes
|
79,950
|
|
|
39,086
|
|
|
(3,956)
|
|
|
43,042
|
|
Income tax provision
(benefit)
|
17,219
|
|
|
13,206
|
|
|
(1,337)
|
|
|
14,543
|
|
Net income
(loss)
|
62,731
|
|
|
25,880
|
|
|
(2,619)
|
|
|
28,499
|
|
Less: Net income
(loss) attributable to non-controlling interest
|
(124)
|
|
|
191
|
|
|
—
|
|
|
191
|
|
Net income (loss)
attributable to Callaway Golf Company
|
$
|
62,855
|
|
|
$
|
25,689
|
|
|
$
|
(2,619)
|
|
|
$
|
28,308
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
|
0.65
|
|
|
$
|
0.27
|
|
|
$
|
(0.03)
|
|
|
$
|
0.30
|
|
Weighted-average
shares outstanding:
|
97,038
|
|
|
95,948
|
|
|
95,948
|
|
|
95,948
|
|
|
(1)
Represents non-recurring costs associated with the acquisition of
Ogio International, Inc. in January 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Trailing
Twelve Month Adjusted EBITDA
|
|
2017 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,
|
|
|
|
2017
|
|
2017
|
|
2017
|
|
2018
|
|
Total
|
|
2016
|
|
2016
|
|
2016
|
|
2017
|
|
Total
|
Net income
(loss)
|
$
|
31,443
|
|
|
$
|
3,060
|
|
|
$
|
(19,386)
|
|
|
$
|
62,855
|
|
|
$
|
77,972
|
|
|
$
|
34,105
|
|
|
$
|
(5,866)
|
|
|
$
|
123,271
|
|
|
$
|
25,689
|
|
|
$
|
177,199
|
|
Interest expense,
net
|
550
|
|
|
642
|
|
|
2,004
|
|
|
1,528
|
|
|
4,724
|
|
|
347
|
|
|
431
|
|
|
348
|
|
|
715
|
|
|
1,841
|
|
Income tax provision
(benefit)
|
16,050
|
|
|
1,486
|
|
|
(4,354)
|
|
|
17,219
|
|
|
30,401
|
|
|
1,937
|
|
|
1,294
|
|
|
(137,193)
|
|
|
13,206
|
|
|
(120,756)
|
|
Depreciation and
amortization expense
|
4,178
|
|
|
4,309
|
|
|
4,799
|
|
|
4,737
|
|
|
18,023
|
|
|
4,180
|
|
|
4,204
|
|
|
4,045
|
|
|
4,319
|
|
|
16,748
|
|
EBITDA
|
$
|
52,221
|
|
|
$
|
9,497
|
|
|
$
|
(16,937)
|
|
|
$
|
86,339
|
|
|
$
|
131,120
|
|
|
$
|
40,569
|
|
|
$
|
63
|
|
|
$
|
(9,529)
|
|
|
$
|
43,929
|
|
|
$
|
75,032
|
|
Gain on sale of
Topgolf investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,662)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,662)
|
|
Ogio &
TravisMathew acquisition costs
|
2,254
|
|
|
3,377
|
|
|
1,677
|
|
|
—
|
|
|
7,308
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,956
|
|
|
3,956
|
|
Adjusted
EBITDA
|
$
|
54,475
|
|
|
$
|
12,874
|
|
|
$
|
(15,260)
|
|
|
$
|
86,339
|
|
|
$
|
138,428
|
|
|
$
|
22,907
|
|
|
$
|
63
|
|
|
$
|
(9,529)
|
|
|
$
|
47,885
|
|
|
$
|
61,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CALLAWAY GOLF
COMPANY
|
Reconciliation of
Non-GAAP Second Quarter and Full Year 2017 Results
|
(Unaudited)
|
(In
thousands)
|
|
|
Three Months Ended
June 30, 2017
|
|
Total As
Reported
|
|
Ogio
Acquisition
Costs(1)
|
|
Non-GAAP
|
Net sales
|
$
|
304,548
|
|
|
$
|
—
|
|
|
$
|
304,548
|
|
Gross
profit
|
148,165
|
|
|
—
|
|
|
148,165
|
|
% of sales
|
48.7
|
%
|
|
—
|
|
|
48.7
|
%
|
Operating
expenses
|
99,120
|
|
|
2,254
|
|
|
96,866
|
|
Income from
operations
|
49,045
|
|
|
(2,254)
|
|
|
51,299
|
|
Other income
(expense), net
|
(1,521)
|
|
|
—
|
|
|
(1,521)
|
|
Income before income
taxes
|
47,524
|
|
|
(2,254)
|
|
|
49,778
|
|
Income tax provision
(benefit)
|
16,050
|
|
|
(761)
|
|
|
16,811
|
|
Net income
(loss)
|
31,474
|
|
|
(1,493)
|
|
|
32,967
|
|
Less: Net income
attributable to non-controlling interest
|
31
|
|
|
—
|
|
|
31
|
|
Net income (loss)
attributable to Callaway Golf Company
|
$
|
31,443
|
|
|
$
|
(1,493)
|
|
|
$
|
32,936
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
|
0.33
|
|
|
$
|
(0.01)
|
|
|
$
|
0.34
|
|
Weighted-average
shares outstanding:
|
96,197
|
|
|
96,197
|
|
|
96,197
|
|
|
(1) Represents
non-recurring costs associated with the acquisition of Ogio
International, Inc. in January 2017.
|
|
Year Ended
December 31, 2017
|
|
Total As
Reported
|
|
Acquisition
Costs(1)
|
|
Non-Cash
Tax
Adjustment(2)
|
|
Non-GAAP
|
Net sales
|
$
|
1,048,736
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,048,736
|
|
Gross
profit
|
480,448
|
|
|
(2,439)
|
|
|
—
|
|
|
482,887
|
|
% of sales
|
45.8
|
%
|
|
—
|
|
|
—
|
|
|
46.0
|
%
|
Operating
expenses
|
401,611
|
|
|
8,825
|
|
|
—
|
|
|
392,786
|
|
Income (loss) from
operations
|
78,837
|
|
|
(11,264)
|
|
|
—
|
|
|
90,101
|
|
Other expense,
net
|
(10,782)
|
|
|
—
|
|
|
—
|
|
|
(10,782)
|
|
Income (loss) before
income taxes
|
68,055
|
|
|
(11,264)
|
|
|
—
|
|
|
79,319
|
|
Income tax provision
(benefit)
|
26,388
|
|
|
(4,118)
|
|
|
3,394
|
|
|
27,112
|
|
Net income
(loss)
|
41,667
|
|
|
(7,146)
|
|
|
(3,394)
|
|
|
52,207
|
|
Less: Net income
attributable to non-controlling interest
|
861
|
|
|
—
|
|
|
—
|
|
|
861
|
|
Net income (loss)
attributable to Callaway Golf Company
|
$
|
40,806
|
|
|
$
|
(7,146)
|
|
|
$
|
(3,394)
|
|
|
$
|
51,346
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$0.42
|
|
|
($0.07)
|
|
|
($0.04)
|
|
|
$
|
0.53
|
|
Weighted-average
shares outstanding:
|
96,577
|
|
|
96,577
|
|
|
96,577
|
|
|
96,577
|
|
|
(1) Represents
non-recurring costs associated with the acquisitions of Ogio
International, Inc. in January 2017, and TravisMathew, LLC in
August 2017.
|
(2) Represents
approximately $7.5 million of non-recurring income tax expense
resulting from the 2017 Tax Cuts and Jobs Act, partially offset by
a non-recurring benefit of approximately $4.1 million related to
the revaluation of taxes on intercompany transactions, resulting
from the 2016 release of the valuation allowance against the
Company's U.S. deferred tax assets.
|
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SOURCE Callaway Golf Company