CARLSBAD, Calif., Dec. 15, 2014 /PRNewswire/ -- Callaway Golf
Company (NYSE:ELY) announced today that the Company is increasing
its 2014 earnings guidance to $0.17 -
$0.19 per share compared to prior guidance of $0.15 - $0.18 per share. The Company also
announced that it is refining other aspects of its 2014 guidance
but maintaining its 2014 sales guidance, which is an expected
increase in net sales of approximately 6% in 2014 compared to 2013.
In addition, the Company announced revisions to its guidance for
2015 as a result of the recent volatility in foreign currency
exchange rates.
"We are pleased with the success we have had in 2014, including
significant improvements in our operations and financial results,
as well as improvements in brand momentum and market share gains,"
commented Chip Brewer, President and
Chief Executive Officer. "This success will position us well for
2015 from an operational perspective. However, because
approximately half of our business is transacted outside of
the United States, if the recent
strengthening of the U.S dollar persists or strengthens further, it
will have a significant unfavorable impact on our reported results
for 2015. Fortunately, despite these potential currency effects, we
continue to see strong overall results on a constant currency basis
in most areas of our business and expect continued brand momentum
and market share gains in 2015."
2014 Guidance
The Company's estimated results for 2014 reflect the many
operating improvements the Company has made during its turnaround
as well as the recent unfavorable changes in foreign currency
rates. Because of the timing of these rate changes and the
Company's hedging program, the Company expects that the recent
foreign currency changes will have only a limited impact upon its
results for 2014.
The Company's current guidance for the year ending December 31, 2014 is as follows:
- Net sales for the full year continue to be estimated at
approximately $890 million, an
increase of 6% compared to $843
million in 2013. The Company believes this growth rate will
exceed the overall market and be driven by brand momentum and
market share gains. The Company was able to maintain its sales
guidance despite the impact of the foreign currency rate changes
due to higher than anticipated sales of new products during the
fourth quarter.
- Gross margins are currently estimated to be approximately
40.5%, compared to gross margins of 37.3% in 2013. This anticipated
improvement in 2014 is expected to result from improved operating
efficiencies, improved pricing and mix of product sales, and the
decrease in charges related to the cost-reduction initiatives. The
Company previously had estimated 2014 gross margins of 41.0%. The
slight change in estimate includes the limited effect of the
unfavorable changes in foreign currency rates.
- Operating expenses are currently estimated to be approximately
$331 million compared to $326 million in 2013 due to a planned increase in
investments in tour and marketing, higher variable sales related
expenses, and modest cost of living increases. The Company had
previously estimated 2014 operating expenses of $336 million. The change in estimate is primarily
due to continued cost management as well as changes in foreign
currency rates.
- Pre-tax income is estimated to range from $19 - $21 million compared to a pre-tax loss of
$13.3 million in 2013. The Company
had previously estimated pre-tax income for 2014 of $18 - $20 million. The Company continues to
estimate that its tax provision will be approximately $5.6 million in 2014, which is the same as in
2013.
- Fully diluted earnings per share is estimated to range from
$0.17 to $0.19 on a base of 78
million shares, compared to a 2013 loss per share of $0.31 on 73 million shares. The Company
previously estimated fully diluted earnings per share of
$0.15 - $0.18. If the Company is
successful in achieving these results, it would be the Company's
first full year net profit since 2008 and would represent a
significant milestone in the Company's turnaround.
2015 Guidance
The Company is revising its 2015 guidance by providing guidance
on a constant currency basis and by discontinuing its prior
guidance on a GAAP basis. The Company previously estimated
for 2015 on a GAAP basis sales growth of 1% - 2% and steady
improvement in profitability. The Company confirmed that the sole
reason for the revised guidance is the significant volatility in
the foreign currency exchange markets over the last two
months.
Since the Company last provided guidance in October, the U.S.
dollar strengthened significantly against most foreign currencies
in which the Company conducts business. If these rates persist or
the U.S. dollar strengthens further, the exchange rates are
expected to have a significant negative impact upon the Company's
2015 reported results. For example, the change in rates over
the last two months has negatively affected 2015 projected sales by
$31 million and projected earnings by
$0.26 per share. If the current
rates persist at these levels throughout 2015, the Company would
expect for 2015 a modest decline in reported sales and
approximately breakeven profitability. The impact of foreign
currency rates on 2015 results ultimately will be determined by
actual foreign currency rates throughout 2015, as well as the
effect of any hedging contracts implemented in 2015.
The Company also reiterated that its underlying business remains
strong and continues to improve. Given the strength of its business
and its 2015 product line, the Company is estimating for 2015, on a
constant currency basis compared to 2014, sales growth of 2% - 3%
and earnings per share growth nearing 100% based upon 2014 expected
results. The sales growth is expected to be driven by an
estimated 5% - 6% constant-currency sales growth in the Company's
core channel business, partially offset by a strategic change in
product launch timing and a reduction in certain closeout sales
compared to 2014. The Company added that if the foreign
currency rates persist, the Company would seek to mitigate the
effects of such rates over the long-term through changes in local
market pricing, sourcing strategy, and cost management.
2015 Foreign Exchange Impacts
Please see the attached PDF for further information regarding
the impact of foreign currency on the Company's 2015
projections.
PDF -
http://origin-qps.onstreammedia.com/origin/multivu_archive/ENR/1218131-1-2015-FX-Impacts-2014-12-12-Rates.pdf
Conference Call and Webcast
The Company will be holding a conference call at 5:30 a.m. Pacific time tomorrow (Tuesday, December 16, 2014) to discuss the
Company's projected financial results for 2014, the Company's
outlook for 2015 and the effect of foreign currency on the
Company's business and projections. The call will be broadcast live
over the Internet and can be accessed at
www.callawaygolf.com. To listen to the call, 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. Pacific time on Tuesday, December 23, 2014. The replay may
be accessed through the Internet at www.callawaygolf.com.
Non-GAAP Information
The Company has included in this release certain information
that has not been prepared in accordance with accounting principles
generally accepted in the United
States ("GAAP"). This non-GAAP information includes
the following:
Constant Currency Basis. The Company provided certain
information regarding the Company's net sales or projected net
sales or earnings or projected earnings on a "constant currency
basis." This information estimates the impact of changes in
foreign currency exchange rates on the translation of the Company's
current or projected future period net sales or earnings as
compared to the applicable comparable prior 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 prior
period. It does not include any other effect of changes in foreign
currency exchange rates on the Company's results or
business.
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 release or 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
estimated 2015 or 2014 full year sales, sales growth, gross
margins, operating expenses, pre-tax income, and earnings per
share, as well as the Company's recovery and improved
profitability, future market share gains, brand momentum, future
foreign currency rates or the effect thereof on the Company's
business or financial results, or the Company's ability to mitigate
the effects of continued unfavorable foreign currency rates, and
future product launches, and the level of close-out sales in 2015,
are forward-looking statements as defined under the Private
Securities Litigation Reform Act of 1995. These statements
are based upon current information and expectations and are subject
to various risks and unknowns including delays, difficulties, or
increased costs in implementing the Company's turnaround strategy;
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 facility; delays, difficulties or increased costs
in the supply of components needed to manufacture the Company's
products or in designing or manufacturing the Company's products;
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, 2013 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 golf accessories, under the Callaway Golf® and Odyssey®
brands worldwide. For more information please visit
www.callawaygolf.com.
Contacts: Brad Holiday
Patrick Burke
(760) 931-1771
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SOURCE Callaway Golf Company