CARLSBAD, Calif., Aug. 3, 2017 /PRNewswire/ -- Callaway Golf
Company (NYSE:ELY) announced today its second quarter 2017
financial results and increased its full year 2017 net sales and
earnings guidance.
In the second quarter of 2017, as compared to the same period in
2016, the Company's net sales increased $59
million (24%) to $305 million.
This increase was led by a 64% increase in sales of woods,
primarily due to strong sales of the EPIC line of woods, and a 74%
increase in gear, accessories and other, primarily due to the
addition of the new business ventures, OGIO and the Japan apparel joint venture. The overall
increase in net sales reflects the Company's continued brand
momentum and increased hard goods market share, as well as
increased sales in all operating segments and in all reporting
geographic regions.
In addition to the sales increase, the Company also recognized a
significant increase in operating income. The Company's 2017 second
quarter operating income increased 135% to $49 million as compared to the second quarter of
2016. The Company's diluted earnings per share was $0.33 for the second quarter of 2017 compared to
$0.36 for the comparable period in
2016 (which included a $17.7 million
gain on the sale of a small portion of the Company's Topgolf
investment). In addition, as a result of the Company's prior
deferred tax valuation allowance, the Company did not recognize
U.S. income tax expense in the second quarter of 2016. On a
non-GAAP basis (which excludes from 2017 the $2.3 million of OGIO non-recurring transaction
and transition expenses and from 2016 the Topgolf gain, and which
applies an estimated non-GAAP tax rate of 38.5% for the second
quarter of 2016), the Company's earnings per share for the second
quarter of 2017 increased to $0.34 as
compared to $0.12 for the comparable
period in 2016.
As a result of this better than expected second quarter
performance and expectations for continued brand momentum for the
second half of the year, the Company increased its full year sales
guidance to $980 - $995 million as
compared to its prior guidance of $960 -
$980 million. The Company also increased its full year
non-GAAP earnings per share guidance to $0.40 - $0.45 compared to prior guidance of
$0.31 - $0.37. The full year non-GAAP
guidance excludes an estimated $7
million ($0.05 per share) of
non-recurring OGIO transaction and transition expenses but does not
include any effect from the pending acquisition announced earlier
today.
"We are very pleased with our 2017 first half performance,"
commented Chip Brewer, President and
Chief Executive Officer of Callaway Golf Company. "This year's
product line-up, including the EPIC driver and Chrome Soft golf
ball franchise, has resonated strongly with golfers. As a result,
our brand momentum has increased and our hard goods market share
has increased in every major region, resulting in double-digit net
sales growth and double-digit EBITDA growth. Furthermore, our new
ventures, namely the apparel joint venture in Japan and the OGIO business, continue to
perform well. We are also very pleased to announce our agreement to
acquire TravisMathew. It is an exceptional high-growth golf and
lifestyle apparel company that fits extremely well with our
business, growth strategy, brands and culture. Moving into the
second half of the year, we are cautiously optimistic about the
golf industry overall and very excited about TravisMathew becoming
a part of Callaway."
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 second quarter and first half of 2017 excluding the
non-recurring transaction and transition expenses related to the
OGIO acquisition. Additionally, during the second quarter of 2016,
the Company sold a small portion of its Topgolf investment and
recognized a gain of $18 million,
which is excluded from the non-GAAP presentation. Lastly, because
of the Company's prior deferred tax valuation allowance, the
Company did not recognize U.S. income tax expense during the second
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 second quarter of 2017. In order to make 2016 more comparable
to 2017 for evaluation purposes, the Company has presented 2016
results on a non-GAAP basis by applying an estimated income tax
rate of 38.5% as compared to the actual second quarter and first
half 2016 effective tax rates of 5.4% and 4.4%, respectively. 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 Company also provided information concerning
its earnings before interest, taxes, depreciation and amortization
expense, the non-recurring OGIO costs and the Topgolf gain
("Adjusted EBITDA").
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 Second Quarter 2017 Financial Results
The Company announced the following GAAP and non-GAAP financial
results for the second quarter of 2017 (in millions, except
gross margin and EPS):
2017 RESULTS
(GAAP)
|
|
NON-GAAP
PRESENTATION
|
|
Q2
2017
|
Q2
2016
|
Change
|
|
Q2
2017 non-GAAP
|
Q2 2016
non-GAAP
|
Change
|
Net Sales
|
$305
|
$246
|
$59
|
|
$305
|
$246
|
$59
|
Gross
Profit Gross Margin
|
$148 48.7%
|
$111 45.0%
|
$37 370
b.p.
|
|
$148 48.7%
|
$111 45.0%
|
$37 370
b.p.
|
Operating
Expenses
|
$99
|
$90
|
$9
|
|
$97
|
$90
|
$7
|
Operating
Income
|
$49
|
$21
|
$28
|
|
$51
|
$21
|
$30
|
Income Tax
Provision
|
$16
|
$2
|
$14
|
|
$17
|
$7
|
$10
|
Net Income
|
$31
|
$34
|
($3)
|
|
$33
|
$11
|
$22
|
EPS
|
$0.33
|
$0.36
|
($0.03)
|
|
$0.34
|
$0.12
|
$0.22
|
|
|
|
Q2 2017
|
Q2 2016
|
Change
|
|
|
|
Adjusted
EBITDA
|
$54
|
$23
|
$31
|
|
|
For the second quarter of 2017, the Company's net sales
increased $59 million to $305 million compared to $246 million for the same period in 2016. The 24%
increase in net sales is attributable to the strength of the
Company's 2017 product line, including continued success of the
current year EPIC driver and fairway woods, increased golf ball
sales, including the new Chrome Soft X ball, and increased net
sales of gear, accessories and other 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. For the second
consecutive quarter, net sales increased in all major regions and
reflected market share gains in those regions.
For the second quarter of 2017, the Company's gross margin was
48.7% compared to second quarter 2016 gross margin of 45.0%. The
370 basis point increase was primarily due to a favorable shift in
product mix toward the higher margin EPIC woods and irons combined
with overall higher average selling prices, less discounting and
lower promotional activity. The increases were partially offset by
the different economics of the apparel joint venture and the OGIO
business, which have lower gross margins and lower relative
operating expenses as compared to the Company's golf equipment
business.
Operating expenses increased $9
million to $99 million in the
second quarter of 2017 compared to $90
million for the same period in 2016. This increase is due to
the addition in 2017 of operating expenses from the Japan joint venture and the consolidation of
OGIO, as well as $2 million in
non-recurring OGIO transaction and transition expenses.
Second quarter 2017 earnings per share was $0.33, compared to $0.36 for the second quarter of 2016. The
decrease on a GAAP basis was caused by the $2 million OGIO transaction and transition
expenses in the second quarter of 2017, the $18 million Topgolf gain in 2016 and the
difference in effective tax rates. On a non-GAAP basis, which
excludes the impact of the non-recurring OGIO transaction and
transition expenses, excludes the Topgolf gain in 2016 and applies
an estimated tax rate of 38.5% to 2016 pre-tax income as discussed
above, the Company would have reported earnings per share for the
second quarter of 2017 of $0.34,
compared to earnings per share of $0.12 for the second quarter of 2016.
Summary of First Half 2017 Financial Results
The Company announced the following GAAP and non-GAAP financial
results for the first half of 2017 (in millions, except gross
margin and EPS):
2017 RESULTS
(GAAP)
|
|
NON-GAAP
PRESENTATION
|
|
1H
2017
|
1H 2016
|
Change
|
|
1H
2017 non-GAAP
|
1H 2016
non-GAAP
|
Change
|
Net Sales
|
$613
|
$520
|
$93
|
|
$613
|
$520
|
$93
|
Gross
Profit Gross Margin
|
$296 48.2%
|
$243 46.8%
|
$53 140
b.p.
|
|
$296 48.2%
|
$243 46.8%
|
$53 140
b.p.
|
Operating
Expenses
|
$203
|
$177
|
$26
|
|
$196
|
$177
|
$19
|
Operating
Income
|
$93
|
$66
|
$27
|
|
$99
|
$66
|
$33
|
Income Tax
Provision
|
$29
|
$3
|
$26
|
|
$31
|
$22
|
$9
|
Net Income
|
$57
|
$72
|
($15)
|
|
$61
|
$36
|
$25
|
EPS
|
$0.59
|
$0.76
|
($0.17)
|
|
$0.64
|
$0.37
|
$0.27
|
|
|
|
1H 2017
|
1H 2016
|
Change
|
|
|
|
Adjusted
EBITDA
|
$102
|
$67
|
$35
|
|
|
For the first half of 2017, the Company's net sales increased
$93 million to $613 million compared to $520 million for the same period in 2016. The 18%
increase in net sales is attributable to the strength of the
Company's 2017 product line, including continued success of the
current year EPIC driver and fairway woods, increased golf ball
sales, including the new Chrome Soft X ball, and increased gear,
accessories and other 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. In the first half of 2017, net sales
increased in all major regions and reflected market share gains in
those regions.
For the first half of 2017, the Company's gross margin increased
to 48.2% compared to first half 2016 gross margin of 46.8%. The 140
basis point increase was primarily due to a favorable shift in
product mix toward the higher margin EPIC woods and irons combined
with overall higher average selling prices, less discounting and
lower promotional activity. The increases were partially offset by
the different economics of the Japan apparel joint venture and the OGIO
business discussed above.
Operating expenses increased $26
million to $203 million in the
first half of 2017 compared to $177
million for the same period in 2016. This increase is due to
the addition in 2017 of operating expenses from the Japan apparel joint venture and the
consolidation of OGIO, as well as $6
million in non-recurring OGIO transaction and transition
expenses.
First half 2017 earnings per share was $0.59, compared to $0.76 for the first half of 2016. The
decrease on a GAAP basis was caused by the $6 million OGIO transaction and transition
expenses in the first half of 2017, the $18
million Topgolf gain in the first half of 2016 and the
difference in effective tax rates. On a non-GAAP basis, which
excludes the impact of the non-recurring OGIO expenses, excludes
the Topgolf gain and applies an estimated tax rate of 38.5% to 2016
pre-tax income as discussed above, the Company would have reported
earnings per share for the second quarter of 2017 of $0.64, compared to earnings per share of
$0.37 for the first half of
2016.
Business Outlook for 2017
Basis for 2017 GAAP Estimates. The Company's 2017 GAAP
estimates exclude the financial impact of the recently announced
pending acquisition of TravisMathew, LLC, which is estimated to be
approximately $10-15 million in net
sales assuming the transaction closes in the third quarter of 2017.
Including approximately $5 million of
estimated transaction expenses and incremental non-cash expense
resulting from the acquisition purchase accounting adjustments,
TravisMathew is expected to be $0.04
dilutive to the Company's earnings per share 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 half of 2017 was
$6 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 after-tax Topgolf gain. 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.
Given the Company's financial performance during the second
quarter of 2017, the Company is increasing its full year financial
guidance as follows (in millions, except gross margin and
EPS):
Full Year
2017
|
Revised
2017 GAAP Estimate*
|
Revised
2017 Non-GAAP
Estimate*
|
Previous
2017 Non-GAAP
Estimate
|
2016
Pro Forma
Results
|
Net Sales
|
$980 -
$995
|
$980 -
$995
|
$960 -
$980
|
$871
|
Gross
Margin
|
45.8%
|
45.8%
|
45.2%
|
44.2%
|
Operating
Expenses
|
$388
|
$381
|
$383
|
$341
|
Earnings Per
Share
|
$0.35 -
$0.40
|
$0.40 -
$0.45
|
$0.31 -
$0.37
|
$0.24
|
*Excludes the
financial impact of the recently announced pending TravisMathew
acquisition.
|
The Company currently estimates full year 2017 net sales of
$980 - $995 million. This would
result in net sales growth of 13% - 14% in 2017 compared to 2016.
Incremental sales growth versus previous estimates is expected to
be driven primarily by market share gains related to the Company's
2017 product line. The Company currently estimates that changes in
foreign currency rates will adversely affect projected 2017 net
sales by approximately $12 million as
compared to 2016 rates. The Company previously estimated that
changes in foreign currency would adversely affect projected 2017
net sales by $16
million.
The Company currently estimates that its 2017 gross margin will
improve 60 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 decrease $2
million compared to prior estimates.
The Company increased its non-GAAP earnings per share to
$0.40 - $0.45 due to the projected
increase in net sales, improved gross margin and decrease in
estimated operating expenses. The Company's 2017 earnings per share
estimates assume a tax rate of approximately 34.5% and a base of 96
million shares.
Based on the current planned product launches for the remainder
of 2017 and the year-over-year fourth quarter comparison with the
2016 Steelhead irons launch, the majority of the expected increase
in net sales in the second half of 2017 is anticipated to occur in
the third quarter.
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, August 10,
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 and (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, the estimated timing and amount
of expenses related to the integration of the OGIO acquisition, and
the estimated timing and financial impact of the pending
TravisMathew transaction, 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 the risk that the
TravisMathew transaction may not close on the terms or timing
described, or at all; unanticipated difficulties or expenditures
relating to the TravisMathew transaction or the realization of the
anticipated synergies and other benefits; the response of
customers, suppliers or others to the announcement of the
transaction; potential difficulties in employee retention as a
result of the transaction; 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)
|
|
|
June
30, 2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
61,959
|
|
|
|
$
|
125,975
|
|
Accounts receivable,
net
|
|
224,649
|
|
|
|
127,863
|
|
Inventories
|
|
171,780
|
|
|
|
189,400
|
|
Other current
assets
|
|
23,645
|
|
|
|
17,187
|
|
Total current
assets
|
|
482,033
|
|
|
|
460,425
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
60,654
|
|
|
|
54,475
|
|
Intangible assets,
net
|
|
171,868
|
|
|
|
114,324
|
|
Deferred taxes,
net
|
|
82,835
|
|
|
|
114,707
|
|
Investment in
golf-related venture
|
|
48,997
|
|
|
|
48,997
|
|
Other
assets
|
|
8,777
|
|
|
|
8,354
|
|
Total
assets
|
|
$
|
855,164
|
|
|
|
$
|
801,282
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
144,978
|
|
|
|
$
|
132,521
|
|
Accrued employee
compensation and benefits
|
|
27,323
|
|
|
|
32,568
|
|
Asset-based credit
facilities
|
|
6,231
|
|
|
|
11,966
|
|
Accrued warranty
expense
|
|
5,969
|
|
|
|
5,395
|
|
Income tax
liability
|
|
3,491
|
|
|
|
4,404
|
|
Total current
liabilities
|
|
187,992
|
|
|
|
186,854
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
6,246
|
|
|
|
5,828
|
|
Total Callaway Golf
Company shareholders' equity
|
|
651,794
|
|
|
|
598,906
|
|
Non-controlling
interest in consolidated entity
|
|
9,132
|
|
|
|
9,694
|
|
Total liabilities and
shareholders' equity
|
|
$
|
855,164
|
|
|
|
$
|
801,282
|
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
Three Months
Ended June
30,
|
|
2017
|
|
2016
|
Net sales
|
$
|
304,548
|
|
|
$
|
245,594
|
|
Cost of
sales
|
156,383
|
|
|
134,961
|
|
Gross
profit
|
148,165
|
|
|
110,633
|
|
Operating
expenses:
|
|
|
|
Selling
|
68,102
|
|
|
64,388
|
|
General and
administrative
|
22,155
|
|
|
17,089
|
|
Research and
development
|
8,863
|
|
|
8,288
|
|
Total operating
expenses
|
99,120
|
|
|
89,765
|
|
Income from
operations
|
49,045
|
|
|
20,868
|
|
Gain on sale of
investment in golf-related venture
|
—
|
|
|
17,662
|
|
Other expense,
net
|
(1,521)
|
|
|
(2,488)
|
|
Income before income
taxes
|
47,524
|
|
|
36,042
|
|
Income tax
provision
|
16,050
|
|
|
1,937
|
|
Net income
|
31,474
|
|
|
34,105
|
|
Less: Net income
attributable to non-controlling interest
|
31
|
|
|
—
|
|
Net income
attributable to Callaway Golf Company
|
$
|
31,443
|
|
|
$
|
34,105
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
|
0.33
|
|
|
$
|
0.36
|
|
Diluted
|
$
|
0.33
|
|
|
$
|
0.36
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
94,213
|
|
|
94,029
|
|
Diluted
|
96,197
|
|
|
95,893
|
|
|
|
|
|
|
Six Months
Ended
June 30,
|
|
2017
|
|
2016
|
Net sales
|
$
|
613,475
|
|
|
$
|
519,647
|
|
Cost of
sales
|
317,595
|
|
|
276,622
|
|
Gross
profit
|
295,880
|
|
|
243,025
|
|
Operating
expenses:
|
|
|
|
Selling
|
139,864
|
|
|
127,674
|
|
General and
administrative
|
45,019
|
|
|
32,633
|
|
Research and
development
|
17,745
|
|
|
16,522
|
|
Total operating
expenses
|
202,628
|
|
|
176,829
|
|
Income from
operations
|
93,252
|
|
|
66,196
|
|
Gain on sale of
investment in golf-related venture
|
—
|
|
|
17,662
|
|
Other expense,
net
|
(6,642)
|
|
|
(8,025)
|
|
Income before income
taxes
|
86,610
|
|
|
75,833
|
|
Income tax
provision
|
29,256
|
|
|
3,338
|
|
Net income
|
57,354
|
|
|
72,495
|
|
Less: Net income
attributable to non-controlling interest
|
222
|
|
|
—
|
|
Net income
attributable to Callaway Golf Company
|
$
|
57,132
|
|
|
$
|
72,495
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
|
0.61
|
|
|
$
|
0.77
|
|
Diluted
|
$
|
0.59
|
|
|
$
|
0.76
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
94,142
|
|
|
93,990
|
|
Diluted
|
96,073
|
|
|
95,658
|
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOW
|
(Unaudited)
|
(In
thousands)
|
|
|
Six Months
Ended
June 30,
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
57,354
|
|
|
$
|
72,495
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
8,497
|
|
|
8,337
|
|
Deferred taxes,
net
|
33,028
|
|
|
(347)
|
|
Share-based
compensation
|
5,402
|
|
|
4,329
|
|
Loss (gain) on
disposal of long-lived assets and deferred gain
amortization
|
1,035
|
|
|
(124)
|
|
Gain on sale of
investment in golf-related venture
|
—
|
|
|
(17,662)
|
|
Unrealized loss on
foreign currency forward contracts
|
1,550
|
|
|
884
|
|
Changes in assets and
liabilities
|
(80,542)
|
|
|
(50,151)
|
|
Net cash provided by
operating activities
|
26,324
|
|
|
17,761
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Acquisition, net of
cash acquired
|
(57,890)
|
|
|
—
|
|
Capital
expenditures
|
(12,186)
|
|
|
(7,487)
|
|
Proceeds from sale of
property, plant and equipment
|
560
|
|
|
20
|
|
Proceeds from sale of
investment in golf-related ventures
|
—
|
|
|
23,429
|
|
Proceeds from note
receivable
|
—
|
|
|
3,104
|
|
Investments in
golf-related venture
|
—
|
|
|
(1,560)
|
|
Net cash (used in)
provided by investing activities
|
(69,516)
|
|
|
17,506
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Repayments of
asset-based credit facilities, net
|
(5,735)
|
|
|
(9,638)
|
|
Acquisition of
treasury stock
|
(16,410)
|
|
|
(5,133)
|
|
Dividends
paid
|
(1,882)
|
|
|
(1,882)
|
|
Exercise of stock
options
|
3,085
|
|
|
2,096
|
|
Distribution to
non-controlling interest
|
(974)
|
|
|
—
|
|
Net cash used in
financing activities
|
(21,916)
|
|
|
(14,557)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1,092
|
|
|
(2,892)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(64,016)
|
|
|
17,818
|
|
Cash and cash
equivalents at beginning of period
|
125,975
|
|
|
49,801
|
|
Cash and cash
equivalents at end of period
|
$
|
61,959
|
|
|
$
|
67,619
|
|
CALLAWAY GOLF
COMPANY
|
Consolidated Net
Sales and Operating Segment Information
|
(Unaudited)
|
(In
thousands)
|
|
|
Net Sales by
Product Category
|
|
Net Sales by
Product Category
|
|
Three Months
Ended
June 30,
|
|
Growth/(Decline)
|
|
Non-GAAP Constant Currency vs. 2016(2)
|
|
Six Months
Ended June
30,
|
|
Growth/(Decline)
|
|
Non-GAAP Constant Currency vs. 2016(2)
|
|
2017
|
|
2016(1)
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
2017
|
|
2016(1)
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woods
|
$
|
89,276
|
|
|
$
|
54,582
|
|
|
$
|
34,694
|
|
|
63.6%
|
|
|
65.8%
|
|
$
|
196,851
|
|
|
$
|
143,830
|
|
|
$
|
53,021
|
|
|
36.9%
|
|
|
38.1%
|
Irons
|
82,285
|
|
|
84,458
|
|
|
(2,173)
|
|
|
(2.6)%
|
|
|
(1.3)%
|
|
141,296
|
|
|
160,058
|
|
|
(18,762)
|
|
|
(11.7)%
|
|
|
(10.7)%
|
Putters
|
24,730
|
|
|
25,411
|
|
|
(681)
|
|
|
(2.7)%
|
|
|
(1.4)%
|
|
51,735
|
|
|
55,624
|
|
|
(3,889)
|
|
|
(7.0)%
|
|
|
(6.2)%
|
Golf balls
|
48,767
|
|
|
46,996
|
|
|
1,771
|
|
|
3.8%
|
|
|
5.1%
|
|
96,991
|
|
|
88,412
|
|
|
8,579
|
|
|
9.7%
|
|
|
10.6%
|
Gear/Accessories/Other
|
59,490
|
|
|
34,147
|
|
|
25,343
|
|
|
74.2%
|
|
|
76.7%
|
|
126,602
|
|
|
71,723
|
|
|
54,879
|
|
|
76.5%
|
|
|
78.0%
|
|
$
|
304,548
|
|
|
$
|
245,594
|
|
|
$
|
58,954
|
|
|
24.0%
|
|
|
25.7%
|
|
$
|
613,475
|
|
|
$
|
519,647
|
|
|
$
|
93,828
|
|
|
18.1%
|
|
|
19.2%
|
|
(1) The
Company changed its operating segments as of January 1, 2017.
Accordingly, prior period amounts have been reclassified 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
|
|
Net Sales by
Region
|
|
Three Months
Ended June
30,
|
|
Growth
|
|
Non-GAAP Constant Currency vs. 2016(1)
|
|
Six Months
Ended June
30,
|
|
Growth
|
|
Non-GAAP Constant Currency vs. 2016(1)
|
|
2017
|
|
2016
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
2017
|
|
2016
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
168,413
|
|
|
$
|
127,182
|
|
|
$
|
41,231
|
|
|
32.4%
|
|
|
32.4%
|
|
$
|
348,235
|
|
|
$
|
287,230
|
|
|
$
|
61,005
|
|
|
21.2%
|
|
|
21.2%
|
Europe
|
42,977
|
|
|
36,923
|
|
|
6,054
|
|
|
16.4%
|
|
|
24.0%
|
|
86,096
|
|
|
74,824
|
|
|
11,272
|
|
|
15.1%
|
|
|
23.1%
|
Japan
|
47,869
|
|
|
40,551
|
|
|
7,318
|
|
|
18.0%
|
|
|
21.1%
|
|
94,369
|
|
|
79,829
|
|
|
14,540
|
|
|
18.2%
|
|
|
19.2%
|
Rest of
Asia
|
24,257
|
|
|
20,137
|
|
|
4,120
|
|
|
20.5%
|
|
|
18.2%
|
|
42,579
|
|
|
35,946
|
|
|
6,633
|
|
|
18.5%
|
|
|
15.6%
|
Other foreign
countries
|
21,032
|
|
|
20,801
|
|
|
231
|
|
|
1.1%
|
|
|
3.6%
|
|
42,196
|
|
|
41,818
|
|
|
378
|
|
|
0.9%
|
|
|
0.8%
|
|
$
|
304,548
|
|
|
$
|
245,594
|
|
|
$
|
58,954
|
|
|
24.0%
|
|
|
25.7%
|
|
$
|
613,475
|
|
|
$
|
519,647
|
|
|
$
|
93,828
|
|
|
18.1%
|
|
|
19.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2016 exchange rates to 2017 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
|
|
Operating Segment
Information
|
|
|
|
Three Months
Ended June
30,
|
|
Growth
|
|
|
|
Six Months
Ended June
30,
|
|
Growth
|
|
|
|
2017
|
|
2016(1)
|
|
Dollars
|
|
Percent
|
|
|
|
2017
|
|
2016(1)
|
|
Dollars
|
|
Percent
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf Club
|
$
|
196,291
|
|
|
$
|
164,451
|
|
|
$
|
31,840
|
|
|
19.4%
|
|
|
|
|
$
|
389,882
|
|
|
$
|
359,512
|
|
|
$
|
30,370
|
|
|
8.4%
|
|
|
|
Golf Ball
|
48,767
|
|
|
46,996
|
|
|
1,771
|
|
|
3.8%
|
|
|
|
|
96,991
|
|
|
88,412
|
|
|
8,579
|
|
|
9.7%
|
|
|
|
Gear/Accessories/Other
|
59,490
|
|
|
34,147
|
|
|
25,343
|
|
|
74.2%
|
|
|
|
|
126,602
|
|
|
71,723
|
|
|
54,879
|
|
|
76.5%
|
|
|
|
|
$
|
304,548
|
|
|
$
|
245,594
|
|
|
$
|
58,954
|
|
|
24.0%
|
|
|
|
|
$
|
613,475
|
|
|
$
|
519,647
|
|
|
$
|
93,828
|
|
|
18.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf clubs
|
$
|
38,445
|
|
|
$
|
17,973
|
|
|
$
|
20,472
|
|
|
113.9%
|
|
|
|
|
$
|
73,398
|
|
|
$
|
53,414
|
|
|
$
|
19,984
|
|
|
37.4%
|
|
|
|
Golf balls
|
10,939
|
|
|
7,534
|
|
|
3,405
|
|
|
45.2%
|
|
|
|
|
22,460
|
|
|
18,140
|
|
|
4,320
|
|
|
23.8%
|
|
|
|
Gear/Accessories/Other
|
11,877
|
|
|
6,696
|
|
|
5,181
|
|
|
77.4%
|
|
|
|
|
21,496
|
|
|
16,158
|
|
|
5,338
|
|
|
33.0%
|
|
|
|
Reconciling
items(2)
|
(13,737)
|
|
|
3,839
|
|
|
(17,576)
|
|
|
(457.8)%
|
|
|
|
|
(30,744)
|
|
|
(11,879)
|
|
|
(18,865)
|
|
|
(158.8)%
|
|
|
|
|
$
|
47,524
|
|
|
$
|
36,042
|
|
|
$
|
11,482
|
|
|
31.9%
|
|
|
|
|
$
|
86,610
|
|
|
$
|
75,833
|
|
|
$
|
10,777
|
|
|
14.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
Company changed its operating segments as of January 1, 2017.
Accordingly, prior period amounts have been reclassified 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
June 30, 2017
|
|
Three months ended
June 30, 2016
|
|
|
As
Reported
|
|
Ogio
Acquisition
Costs(1)
|
|
Non-GAAP
|
|
As
Reported
|
|
Non-Cash Tax
Adjustment(2)
|
|
Topgolf
Gain(3)
|
|
Non-GAAP
|
|
Net sales
|
$
|
304,548
|
|
|
$
|
—
|
|
|
$
|
304,548
|
|
|
$
|
245,594
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
245,594
|
|
|
Gross
profit
|
148,165
|
|
|
—
|
|
|
148,165
|
|
|
110,633
|
|
|
—
|
|
|
—
|
|
|
110,633
|
|
|
% of sales
|
48.7
|
%
|
|
—
|
|
|
48.7
|
%
|
|
45.0
|
%
|
|
—
|
|
|
—
|
|
|
45.0
|
%
|
|
Operating
expenses
|
99,120
|
|
|
2,254
|
|
|
96,866
|
|
|
89,765
|
|
|
—
|
|
|
—
|
|
|
89,765
|
|
|
Income (loss) from
operations
|
49,045
|
|
|
(2,254)
|
|
|
51,299
|
|
|
20,868
|
|
|
—
|
|
|
—
|
|
|
20,868
|
|
|
Other income
(expense), net
|
(1,521)
|
|
|
—
|
|
|
(1,521)
|
|
|
15,174
|
|
|
—
|
|
|
17,662
|
|
|
(2,488)
|
|
|
Income (loss) before
income taxes
|
47,524
|
|
|
(2,254)
|
|
|
49,778
|
|
|
36,042
|
|
|
—
|
|
|
17,662
|
|
|
18,380
|
|
|
Income tax provision
(benefit)
|
16,050
|
|
|
(761)
|
|
|
16,811
|
|
|
1,937
|
|
|
(12,327)
|
|
|
7,188
|
|
|
7,076
|
|
|
Net income
(loss)
|
31,474
|
|
|
(1,493)
|
|
|
32,967
|
|
|
34,105
|
|
|
12,327
|
|
|
10,474
|
|
|
11,304
|
|
|
Less: Net income
attributable to non-controlling interest
|
31
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net income (loss)
attributable to Callaway Golf Company
|
$
|
31,443
|
|
|
$
|
(1,493)
|
|
|
$
|
32,936
|
|
|
$
|
34,105
|
|
|
$
|
12,327
|
|
|
$
|
10,474
|
|
|
$
|
11,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
|
0.33
|
|
|
$
|
(0.01)
|
|
|
$
|
0.34
|
|
|
$
|
0.36
|
|
|
$
|
0.13
|
|
|
$
|
0.11
|
|
|
$
|
0.12
|
|
|
Weighted-average
shares outstanding:
|
96,197
|
|
|
96,197
|
|
|
96,197
|
|
|
95,893
|
|
|
95,893
|
|
|
95,893
|
|
|
95,893
|
|
|
|
(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 second
quarter of 2016, which resulted in no federal U.S. tax expense for
the quarter. In the fourth quarter of 2016, the Company reversed a
significant portion of the valuation allowance and recognized
income taxes on its U.S. operations that were retroactive for all
of 2016. For comparability to the second quarter of 2017, the
Company applied an estimated statutory tax rate of 38.5% to
calculate pro-forma results for the second quarter of
2016.
|
(3)
|
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. The application of
income taxes on this gain is for presentation purposes only. At the
time the gain was recognized in the second quarter of 2016, the
Company did not recognize income taxes on its U.S. operations due
to the valuation allowance on its U.S. deferred tax assets. As
mentioned above, a significant portion of this valuation allowance
was reversed in the fourth quarter of 2016, and the Company
recognized income taxes on its U.S. operations that were
retroactive for all of 2016.
|
CALLAWAY GOLF
COMPANY
|
Supplemental
Financial Information and Non-GAAP Reconciliation
|
(Unaudited)
|
(In
thousands)
|
|
|
Six Months Ended
June 30, 2017
|
|
|
Six Months Ended
June 30, 2016
|
|
|
As
Reported
|
|
Ogio
Acquisition
Costs(1)
|
|
Non-GAAP
|
|
|
As
Reported
|
|
Non-Cash Tax
Adjustment(2)
|
|
Topgolf
Gain(3)
|
|
Non-GAAP
|
|
Net sales
|
$
|
613,475
|
|
|
$
|
—
|
|
|
$
|
613,475
|
|
|
|
$
|
519,647
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
519,647
|
|
|
Gross
profit
|
295,880
|
|
|
—
|
|
|
295,880
|
|
|
|
243,025
|
|
|
—
|
|
|
—
|
|
|
243,025
|
|
|
% of sales
|
48.2
|
%
|
|
—
|
|
|
48.2
|
%
|
|
|
46.8
|
%
|
|
—
|
|
|
—
|
|
|
46.8
|
%
|
|
Operating
expenses
|
202,628
|
|
|
6,210
|
|
|
196,418
|
|
|
|
176,829
|
|
|
—
|
|
|
—
|
|
|
176,829
|
|
|
Income (loss) from
operations
|
93,252
|
|
|
(6,210)
|
|
|
99,462
|
|
|
|
66,196
|
|
|
—
|
|
|
—
|
|
|
66,196
|
|
|
Other income
(expense), net
|
(6,642)
|
|
|
—
|
|
|
(6,642)
|
|
|
|
9,637
|
|
|
—
|
|
|
17,662
|
|
|
(8,025)
|
|
|
Income (loss) before
income taxes
|
86,610
|
|
|
(6,210)
|
|
|
92,820
|
|
|
|
75,833
|
|
|
—
|
|
|
17,662
|
|
|
58,171
|
|
|
Income tax provision
(benefit)
|
29,256
|
|
|
(2,098)
|
|
|
31,354
|
|
|
|
3,338
|
|
|
(26,246)
|
|
|
7,188
|
|
|
22,396
|
|
|
Net income
(loss)
|
57,354
|
|
|
(4,112)
|
|
|
61,466
|
|
|
|
72,495
|
|
|
26,246
|
|
|
10,474
|
|
|
35,775
|
|
|
Less: Net income
attributable to non-controlling interest
|
222
|
|
|
—
|
|
|
222
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net income (loss)
attributable to Callaway Golf Company
|
$
|
57,132
|
|
|
$
|
(4,112)
|
|
|
$
|
61,244
|
|
|
|
$
|
72,495
|
|
|
$
|
26,246
|
|
|
$
|
10,474
|
|
|
$
|
35,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
|
0.59
|
|
|
$
|
(0.05)
|
|
|
$
|
0.64
|
|
|
|
$
|
0.76
|
|
|
$
|
0.28
|
|
|
$
|
0.11
|
|
|
$
|
0.37
|
|
|
Weighted-average
shares outstanding:
|
96,073
|
|
|
96,073
|
|
|
96,073
|
|
|
|
95,658
|
|
|
95,658
|
|
|
95,658
|
|
|
95,658
|
|
|
|
(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
half of 2016, which resulted in federal U.S. tax expense for the
six months ended June 30, 2016. In the fourth quarter of 2016, the
Company reversed a significant portion of the valuation allowance
and recognized income taxes on its U.S. operations that were
retroactive for all of 2016. For comparability to 2017, the Company
applied an estimated statutory tax rate of 38.5% to calculate
pro-forma results for the six months ended June 30,
2016.
|
(3)
|
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. The application of
income taxes on this gain is for presentation purposes only. At the
time the gain was recognized in the first six months of 2016, the
Company did not recognize income taxes on its U.S. operations due
to the valuation allowance on its U.S. deferred tax assets. As
mentioned above, a significant portion of this valuation allowance
was reversed in the fourth quarter of 2016, and the Company
recognized income taxes on its U.S. operations that were
retroactive for all of 2016.
|
CALLAWAY GOLF
COMPANY
|
Supplemental
Financial Information and Non-GAAP Reconciliation
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Trailing
Twelve Month Adjusted EBITDA
|
|
2016 Trailing
Twelve Month Adjusted EBITDA
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
September
30,
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
|
|
September
30,
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
|
|
2016
|
|
2016
|
|
2017
|
|
2017
|
|
Total
|
|
2015
|
|
2015
|
|
2016
|
|
2016
|
|
Total
|
Net income
(loss)
|
$
|
(5,866)
|
|
|
$
|
123,271
|
|
|
$
|
25,689
|
|
|
$
|
31,443
|
|
|
$
|
174,537
|
|
|
$
|
(3,617)
|
|
|
$
|
(30,452)
|
|
|
$
|
38,390
|
|
|
$
|
34,105
|
|
|
$
|
38,426
|
|
Interest expense,
net
|
431
|
|
|
348
|
|
|
715
|
|
|
550
|
|
|
2,044
|
|
|
3,520
|
|
|
868
|
|
|
621
|
|
|
347
|
|
|
5,356
|
|
Income tax provision
(benefit)
|
1,294
|
|
|
(137,193)
|
|
|
13,206
|
|
|
16,050
|
|
|
(106,643)
|
|
|
1,547
|
|
|
493
|
|
|
1,401
|
|
|
1,937
|
|
|
5,378
|
|
Depreciation and
amortization expense
|
4,204
|
|
|
4,045
|
|
|
4,319
|
|
|
4,178
|
|
|
16,746
|
|
|
4,193
|
|
|
4,029
|
|
|
4,157
|
|
|
4,180
|
|
|
16,559
|
|
EBITDA
|
$
|
63
|
|
|
$
|
(9,529)
|
|
|
$
|
43,929
|
|
|
$
|
52,221
|
|
|
$
|
86,684
|
|
|
$
|
5,643
|
|
|
$
|
(25,062)
|
|
|
$
|
44,569
|
|
|
$
|
40,569
|
|
|
$
|
65,719
|
|
Gain on sale of
Topgolf investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,662)
|
|
|
(17,662)
|
|
Ogio acquisition
costs
|
—
|
|
|
—
|
|
|
3,956
|
|
|
2,254
|
|
|
6,210
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
63
|
|
|
$
|
(9,529)
|
|
|
$
|
47,885
|
|
|
$
|
54,475
|
|
|
$
|
92,894
|
|
|
$
|
5,643
|
|
|
$
|
(25,062)
|
|
|
$
|
44,569
|
|
|
$
|
22,907
|
|
|
$
|
48,057
|
|
CALLAWAY GOLF
COMPANY
|
Reconciliation of
Non-GAAP 2016 Results
|
(Unaudited)
|
(In
thousands)
|
|
|
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 interest
|
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
Consolidated
Net Sales by Product Category Reclassified For New Segment
Presentation
(Unaudited)
(In thousands)
Effective January 1, 2017, the
Company changed its operating segments and established a new
operating segment, Gear, Accessories and Other. As a result of this
change, the Golf Clubs operating segment is now comprised of the
woods, irons and putters product categories, and the Golf Ball
operating segment is comprised of golf balls. The accessories and
other product category, which was previously reported within the
Golf Clubs operating segment, is now included in the new Gear,
Accessories and Other operating segment. Accordingly, as a result
of this change, net sales by product category for 2016 and all
interim periods therein were reclassified to conform with the new
operating segment presentation as follows: (i) sales of pre-owned
clubs, which were previously in accessories and other, are now
reported by product type within woods, irons and putters; (ii)
sales of packaged sets, which were previously reported in
accessories and other, are now reported within irons; and (iii)
sales of golf apparel and footwear, golf bags, golf gloves, travel
gear, headwear and other golf-related accessories, OGIO branded
gear and accessories, retail apparel sales from the Company's joint
venture in Japan, in addition to
royalties from licensing of the Company's trademarks and service
marks for various soft goods, which were previously reported in
accessories and other, are now reported in the Gear, Accessories
and Other operating segment.
The table below represents the Company's 2016 consolidated net
sales by product category as previously reported.
|
Three Months
Ended
|
|
Year
Ended
|
|
March 31,
2016
|
|
June 30,
2016
|
|
September 30,
2016
|
|
December 31,
2016
|
|
December 31,
2016
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woods
|
$
|
86,070
|
|
31.4
|
%
|
|
$
|
50,478
|
|
20.6
|
%
|
|
$
|
35,733
|
|
19.0
|
%
|
|
$
|
29,532
|
|
18.0
|
%
|
|
$
|
201,813
|
|
23.2
|
%
|
Irons
|
59,232
|
|
21.6
|
%
|
|
63,416
|
|
25.8
|
%
|
|
50,272
|
|
26.8
|
%
|
|
39,027
|
|
23.8
|
%
|
|
211,947
|
|
24.3
|
%
|
Putters
|
29,750
|
|
10.9
|
%
|
|
25,013
|
|
10.2
|
%
|
|
17,290
|
|
9.2
|
%
|
|
13,989
|
|
8.5
|
%
|
|
86,042
|
|
9.9
|
%
|
Golf balls
|
41,416
|
|
15.1
|
%
|
|
46,996
|
|
19.1
|
%
|
|
32,640
|
|
17.4
|
%
|
|
31,205
|
|
19.1
|
%
|
|
152,257
|
|
17.5
|
%
|
Gear, accessories and
other
|
57,585
|
|
21.0
|
%
|
|
59,691
|
|
24.3
|
%
|
|
51,915
|
|
27.6
|
%
|
|
49,942
|
|
30.5
|
%
|
|
219,133
|
|
25.2
|
%
|
|
$
|
274,053
|
|
100.0
|
%
|
|
$
|
245,594
|
|
100.0
|
%
|
|
$
|
187,850
|
|
100.0
|
%
|
|
$
|
163,695
|
|
100.0
|
%
|
|
$
|
871,192
|
|
100.0
|
%
|
The table below represents the Company's 2016 consolidated net
sales by product category reclassified to conform with the new
segment presentation in the comparable periods of 2017.
|
Reclassified
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
March 31,
2016
|
|
June 30,
2016
|
|
September 30,
2016
|
|
December 31,
2016
|
|
December 31,
2016
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woods
|
$
|
89,248
|
|
32.6
|
%
|
|
$
|
54,582
|
|
22.2
|
%
|
|
$
|
39,331
|
|
20.9
|
%
|
|
$
|
33,024
|
|
20.2
|
%
|
|
$
|
216,185
|
|
24.8
|
%
|
Irons
|
75,600
|
|
27.6
|
%
|
|
84,458
|
|
34.4
|
%
|
|
64,305
|
|
34.2
|
%
|
|
54,105
|
|
33.1
|
%
|
|
278,468
|
|
32.0
|
%
|
Putters
|
30,213
|
|
11.0
|
%
|
|
25,411
|
|
10.3
|
%
|
|
17,591
|
|
9.4
|
%
|
|
14,513
|
|
8.9
|
%
|
|
87,728
|
|
10.1
|
%
|
Golf balls
|
41,416
|
|
15.1
|
%
|
|
46,996
|
|
19.1
|
%
|
|
32,640
|
|
17.4
|
%
|
|
31,205
|
|
19.1
|
%
|
|
152,257
|
|
17.5
|
%
|
Gear, accessories and
other
|
37,576
|
|
13.7
|
%
|
|
34,147
|
|
13.9
|
%
|
|
33,983
|
|
18.1
|
%
|
|
30,848
|
|
18.8
|
%
|
|
136,554
|
|
15.7
|
%
|
|
$
|
274,053
|
|
100.0
|
%
|
|
$
|
245,594
|
|
100.0
|
%
|
|
$
|
187,850
|
|
100.0
|
%
|
|
$
|
163,695
|
|
100.0
|
%
|
|
$
|
871,192
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
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multimedia:http://www.prnewswire.com/news-releases/callaway-golf-company-announces-second-quarter-2017-financial-results-including-a-24-increase-in-net-sales-callaway-increases-full-year-net-sales-and-earnings-guidance-300499449.html
SOURCE Callaway Golf Company