CARLSBAD, Calif., Nov. 3, 2016 /PRNewswire/ -- Callaway Golf
Company (NYSE:ELY) today announced its third quarter 2016 financial
results, including a 6.9% increase in net sales, continued benefits
from its operational improvements and a net loss of $0.06 per share. The Company generally
reports a net loss in the third quarter due to the seasonality of
its business but the Company had expected a net loss of
$0.15 - $0.10 as a result of a
planned increase in operating expenses in the third quarter of 2016
compared to 2015. The increased sales, however, offset the
increased expenses. These results reflect the Company's
continued brand strength and additional hard goods market share
gains, as well as the commencement of the Company's joint venture
in Japan in the third quarter of
2016. As discussed below, the third quarter financial results
allowed the Company to narrow its 2016 full year net sales guidance
to the high end of the range to $870 - $880
million and increase its 2016 full year earnings guidance to
$0.50 - $0.54.
"We were pleased to see our continued momentum in the
marketplace in the third quarter," commented Chip Brewer, President and Chief Executive
Officer of Callaway Golf Company. "Despite industry headwinds and
softer than expected market conditions, we grew our net sales in
the third quarter. We also continued to realize benefits from the
comprehensive strategic initiatives we undertook during the last
three years, including working capital improvements and the
extension of product life cycles, with gross margins improving 110
basis points year to date and cash generated from operating
activities increasing over 200% to $86
million for the first nine months of 2016 compared to the
same period in 2015."
Mr. Brewer continued, "I am confident we are on track to create
long-term shareholder value through our improved core business as
well as future growth from strategic ventures within golf or in
areas tangential to the golf equipment business. For instance,
during the third quarter, we acquired Toulon Design and hired its
founder, Sean Toulon, to run our putter business. I couldn't be
more excited about the opportunity to expand the Odyssey brand as
we extend our reach further into the super-premium putter category
through Toulon Design by Odyssey. We are also re-investing in the
future of our golf ball business via further investment in R&D
and today's announced hiring of Rock Ishii, former Sr. Director of
Golf Ball Innovation at Nike. Looking forward, we will continue to
opportunistically seek new strategic growth platforms and strategic
high return investments in our core business. We will also continue
to strengthen our core business through disciplined operational
execution and the introduction of technologically advanced
products. We are very excited about our product line for
2017."
Summary of Third Quarter 2016 Financial Results
For the third quarter of 2016, Callaway announced the following
GAAP financial results, as compared to the same period in 2015
(in millions, except eps):
GAAP
RESULTS
|
|
Third
Quarter
2016
|
Third
Quarter
2015
|
Change
|
Net Sales
|
$188
|
$176
|
$12
|
Gross Profit/
% of Sales
|
$79
42.0%
|
$78
44.1%
|
$1
(210) b.p.
|
Operating
Expenses
|
$84
|
$77
|
$7
|
Pre-Tax
Loss
|
($4)
|
($2)
|
($2)
|
EPS
|
($0.06)
|
($0.04)
|
($0.02)
|
Despite softer than expected market conditions, the Company's
2016 third quarter net sales increased $12
million to $188 million, as
compared to $176 million in the third
quarter of 2015. The higher sales were driven primarily by
increased sales in the irons and golf ball categories, sales from
the Company's new joint venture in Japan, and a net overall positive $5.6 million impact from changes in foreign
currency rates. The increase in net sales helped offset the
210 basis point decrease in gross margins and the $7 million year-over-year increase in operating
expenses. The decrease in gross margin was primarily attributable
to product launch timing resulting in sales of higher margin
products for the third quarter of 2015 as compared to 2016. Full
year 2016 gross margins are still expected to increase over 200
basis points compared to 2015. The increase in operating
expenses in the third quarter of 2016 was due to incremental
expenses related to the Japan
joint venture, a planned shift in the timing of marketing expenses,
and an increase in bad debt expense.
The Company's diluted loss per share for the third quarter of
2016 was $0.06, which was
significantly better than the Company's expected loss of
$0.15 - $0.10. The diluted loss
per share for the third quarter of 2015 was $0.04. As a result of the Company's third
quarter financial performance, the Company increased its full year
earnings guidance as discussed below.
Summary of First Nine Months 2016 Financial Results
For the first nine months of 2016, Callaway announced the
following GAAP financial results, as compared to the same period in
2015 (in millions, except eps):
GAAP
RESULTS
|
|
Q3 YTD
2016
|
Q3 YTD
2015
|
Change
|
Net Sales
|
$707
|
$690
|
$17
|
Gross Profit/
% of Sales
|
$322
45.5%
|
$307
44.4%
|
$15
110 b.p.
|
Operating
Expenses
|
$261
|
$250
|
$11
|
Pre-Tax
Income
|
$71
|
$50
|
$21
|
EPS
|
$0.70
|
$0.53
|
$0.17
|
The Company's $707 million in net
sales for the first nine months of 2016 increased by 2.5% compared
to the first nine months of 2015. Similar to the third quarter,
this increase was driven primarily by increased sales in the irons
and golf ball categories, sales from the Company's new joint
venture in Japan, and a net
overall positive $5.6 million impact
from changes in foreign currency rates. This increase in net
sales, together with a 110 basis point improvement in gross margin,
more than offset the $11 million
increase in operating expenses. The increase in operating expenses
was primarily attributable to a planned increase in marketing
expense, an increase in bad debt expense, and incremental expense
related to the new Japan joint
venture.
This improved operational performance, together with an
$0.18 per share gain on the sale of a
small portion of the Company's Topgolf investment, resulted in a
significant improvement in earnings in 2016 on a year to date
basis. More specifically, diluted earnings per share for the
first nine months of 2016 increased by 32% to $0.70 from $0.53 in
the first nine months of 2015. In addition, including the
$23 million in proceeds from the sale
of the Topgolf investment, total cash and cash equivalents
increased by $75 million for the
first nine months of 2016, and as of September 30, 2016, the Company had no debt.
Business Outlook for 2016
Given the Company's financial performance during the third
quarter, the Company is revising and increasing its overall
guidance as follows:
|
Updated
2016
GAAP
Estimate
|
Previous
2016
GAAP
Estimate
|
2015
Actual
|
Net Sales
|
$870 - $880
million
|
$855 - $880
million
|
$844
million
|
Gross
Margins
|
44.6%
|
44.5%
|
42.4%
|
Operating
Expenses
|
$345
million
|
$348
million
|
$331
million
|
Pre-Tax
Income
|
$54 - $58
million
|
$45 - $55
million
|
$20
million
|
Earnings Per
Share
|
$0.50 -
$0.54
|
$0.40 -
$0.50
|
$0.17
|
The Company's updated guidance is based on current foreign
currency exchange rates. If the foreign currency rates were
to weaken significantly against the U.S. Dollar during the fourth
quarter of the year, the Company's financial results would be
adversely affected. The Company's pre-tax income and earnings per
share estimates for the full year 2016 include the $18 million gain ($0.18 per share) on the second quarter sale of a
portion of its Topgolf investment. The Company's estimate for its
full year 2016 earnings per share assumes a base of 95 million
shares as compared to 85 million shares in 2015. The increased
share count in 2016 is primarily the result of the conversion of
the Company's convertible debt into equity in 2015. This estimate
includes taxes of approximately $6
million and does not include any effect from the potential
reversal of the Company's deferred tax asset valuation allowance as
discussed below.
Conference Call and Webcast
The Company will be holding a conference call today at
2:00 p.m. PDT to discuss the
Company's financial results, outlook and business. 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. PST on Thursday,
November 10, 2016. The replay may be accessed through the
Internet at www.callawaygolf.com.
Deferred Tax Asset Valuation Allowance
As of September 30, 2016, the
Company had a valuation allowance against its U.S. deferred tax
assets in the amount of $164.6
million. The Company evaluates its deferred tax assets each
reporting period to determine the likelihood of the Company being
able to utilize the deferred tax assets prior to their expiration
and the Company will conduct such evaluation again in the fourth
quarter of 2016. If following this review the Company determines
that it is more likely than not that the Company will be able to
utilize the deferred tax assets, the Company would reverse all or a
significant portion of the valuation allowance. If this were to
occur during the fourth quarter of 2016, the Company would realize
a significant one-time, non-cash tax benefit in the period of
reversal and the Company's effective U.S. income tax rate would be
closer to the statutory rate and the new rate would apply
retroactively to 2016 results and going
forward.
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 about its results (i) on a
constant currency basis and (ii) excluding interest, taxes,
depreciation and amortization expenses, and the gain on the sale of
a portion of the Topgolf investment.
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. This calculation also excludes
foreign currency net gains and losses recognized in other
income/expense from the translation of transactions denominated in
foreign currencies and foreign currency gains and losses recognized
from the Company's hedging contracts. It does not include any other
effect of changes in foreign currency rates on the Company's
results or business.
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.
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 estimated 2016 sales, gross
margins, operating expenses, pre-tax income, taxes, and earnings
per share (or related share count), as well as the Company's
momentum, success of future products, including the 2017 product
line, growth opportunities, the investment in corporate or business
development opportunities, future market conditions, the creation
of long-term shareholder value, and the potential reversal of the
Company's deferred tax asset valuation allowance 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 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; 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, 2015 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:
|
Robert
Julian
|
|
Patrick
Burke
|
|
(760)
931-1771
|
CALLAWAY GOLF
COMPANY
CONSOLIDATED
CONDENSED BALANCE SHEETS
(Unaudited)
(In
thousands)
|
|
|
|
|
|
September
30, 2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
124,628
|
|
|
|
$
|
49,801
|
|
Accounts receivable,
net
|
|
158,262
|
|
|
|
115,607
|
|
Inventories
|
|
157,002
|
|
|
|
208,883
|
|
Other current
assets
|
|
12,063
|
|
|
|
17,196
|
|
Total current
assets
|
|
451,955
|
|
|
|
391,487
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
55,775
|
|
|
|
55,808
|
|
Intangible assets,
net
|
|
114,978
|
|
|
|
115,282
|
|
Investment in
golf-related ventures
|
|
49,108
|
|
|
|
53,315
|
|
Other
assets
|
|
16,321
|
|
|
|
15,332
|
|
Total
assets
|
|
$
|
688,137
|
|
|
|
$
|
631,224
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
118,264
|
|
|
|
$
|
122,620
|
|
Accrued employee
compensation and benefits
|
|
30,280
|
|
|
|
33,518
|
|
Asset-based credit
facilities
|
|
—
|
|
|
|
14,969
|
|
Accrued warranty
expense
|
|
5,515
|
|
|
|
5,706
|
|
Income tax
liability
|
|
1,747
|
|
|
|
1,823
|
|
Total current
liabilities
|
|
155,806
|
|
|
|
178,636
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
39,439
|
|
|
|
39,643
|
|
Total Callaway Golf
Company shareholders' equity
|
|
483,303
|
|
|
|
412,945
|
|
Non-controlling
interest in consolidated entity
|
|
9,589
|
|
|
|
—
|
|
Total liabilities and
shareholders' equity
|
|
$
|
688,137
|
|
|
|
$
|
631,224
|
|
CALLAWAY GOLF
COMPANY
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands,
except per share data)
|
|
|
|
Three Months
Ended September
30,
|
|
2016
|
|
2015
|
Net sales
|
$
|
187,850
|
|
|
$
|
175,780
|
|
Cost of
sales
|
108,975
|
|
|
98,178
|
|
Gross
profit
|
78,875
|
|
|
77,602
|
|
Operating
expenses:
|
|
|
|
Selling
|
55,869
|
|
|
52,390
|
|
General and
administrative
|
19,851
|
|
|
15,772
|
|
Research and
development
|
8,420
|
|
|
8,673
|
|
Total operating
expenses
|
84,140
|
|
|
76,835
|
|
Income (loss) from
operations
|
(5,265)
|
|
|
767
|
|
Other income
(expense), net
|
820
|
|
|
(2,837)
|
|
Loss before income
taxes
|
(4,445)
|
|
|
(2,070)
|
|
Income tax
provision
|
1,294
|
|
|
1,547
|
|
Net loss
|
(5,739)
|
|
|
(3,617)
|
|
Less: Net income
attributable to non-controlling interests
|
127
|
|
|
—
|
|
Net loss attributable
to Callaway Golf Company
|
$
|
(5,866)
|
|
|
$
|
(3,617)
|
|
|
|
|
|
Loss per common
share:
|
|
|
|
Basic
|
$
|
(0.06)
|
|
|
$
|
(0.04)
|
|
Diluted
|
$
|
(0.06)
|
|
|
$
|
(0.04)
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
94,081
|
|
|
83,875
|
|
Diluted
|
94,081
|
|
|
83,875
|
|
|
|
|
|
|
Nine Months
Ended September
30,
|
|
2016
|
|
2015
|
Net sales
|
$
|
707,497
|
|
|
$
|
690,463
|
|
Cost of
sales
|
385,597
|
|
|
383,898
|
|
Gross
profit
|
321,900
|
|
|
306,565
|
|
Operating
expenses:
|
|
|
|
Selling
|
183,543
|
|
|
178,675
|
|
General and
administrative
|
52,484
|
|
|
47,407
|
|
Research and
development
|
24,942
|
|
|
24,192
|
|
Total operating
expenses
|
260,969
|
|
|
250,274
|
|
Income from
operations
|
60,931
|
|
|
56,291
|
|
Gain on sale of
golf-related ventures
|
17,662
|
|
|
—
|
|
Other expense,
net
|
(7,205)
|
|
|
(6,269)
|
|
Income before income
taxes
|
71,388
|
|
|
50,022
|
|
Income tax
provision
|
4,632
|
|
|
5,002
|
|
Net income
|
66,756
|
|
|
45,020
|
|
Less: Net income
attributable to non-controlling interests
|
127
|
|
|
—
|
|
Net income
attributable to Callaway Golf Company
|
$
|
66,629
|
|
|
$
|
45,020
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
|
0.71
|
|
|
$
|
0.56
|
|
Diluted
|
$
|
0.70
|
|
|
$
|
0.53
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
94,021
|
|
|
80,030
|
|
Diluted
|
95,687
|
|
|
94,614
|
|
CALLAWAY GOLF
COMPANY
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOW
(Unaudited)
(In
thousands)
|
|
|
|
Nine Months
Ended September
30,
|
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
66,629
|
|
|
$
|
45,020
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
12,541
|
|
|
13,350
|
|
Deferred taxes,
net
|
(370)
|
|
|
(184)
|
|
Share-based
compensation
|
6,465
|
|
|
5,535
|
|
Gain on disposal of
long-lived assets and deferred gain amortization
|
(117)
|
|
|
(772)
|
|
Gain on sale of
golf-related investments
|
(17,662)
|
|
|
—
|
|
Net income
attributable to non-controlling interests
|
127
|
|
|
—
|
|
Debt discount
amortization on convertible notes
|
—
|
|
|
515
|
|
Unrealized loss on
foreign currency forward contracts
|
2,880
|
|
|
—
|
|
Changes in assets and
liabilities
|
15,128
|
|
|
(35,074)
|
|
Net cash provided by
operating activities
|
85,621
|
|
|
28,390
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Proceeds from sale of
investments in golf-related ventures
|
23,429
|
|
|
—
|
|
Proceeds from note
receivable
|
3,104
|
|
|
—
|
|
Capital
expenditures
|
(12,163)
|
|
|
(8,513)
|
|
Investment in
golf-related ventures
|
(1,560)
|
|
|
—
|
|
Proceeds from sale of
property, plant and equipment
|
20
|
|
|
2
|
|
Net cash provided by
(used in) investing activities
|
12,830
|
|
|
(8,511)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Repayments of
asset-based credit facilities, net
|
(14,969)
|
|
|
(15,235)
|
|
Acquisition of
treasury stock
|
(5,133)
|
|
|
(1,942)
|
|
Dividends
paid
|
(2,822)
|
|
|
(2,454)
|
|
Exercise of stock
options
|
2,625
|
|
|
5,330
|
|
Net cash used in
financing activities
|
(20,299)
|
|
|
(14,301)
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(3,325)
|
|
|
(1,621)
|
|
Net increase in cash
and cash equivalents
|
74,827
|
|
|
3,957
|
|
Cash and cash
equivalents at beginning of period
|
49,801
|
|
|
37,635
|
|
Cash and cash
equivalents at end of period
|
$
|
124,628
|
|
|
$
|
41,592
|
|
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 September
30,
|
|
Growth/(Decline)
|
|
|
|
Nine Months
Ended September
30,
|
|
Growth/(Decline)
|
|
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percent
|
|
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percent
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woods
|
$
|
35,733
|
|
|
$
|
48,408
|
|
|
$
|
(12,675)
|
|
|
(26.2)
|
%
|
|
|
|
$
|
172,281
|
|
|
$
|
187,278
|
|
|
$
|
(14,997)
|
|
|
(8.0)
|
%
|
|
|
Irons
|
50,272
|
|
|
42,459
|
|
|
7,813
|
|
|
18.4
|
%
|
|
|
|
172,920
|
|
|
163,272
|
|
|
9,648
|
|
|
5.9
|
%
|
|
|
Putters
|
17,290
|
|
|
17,221
|
|
|
69
|
|
|
0.4
|
%
|
|
|
|
72,053
|
|
|
72,586
|
|
|
(533)
|
|
|
(0.7)
|
%
|
|
|
Gear/Accessories/Other
|
51,915
|
|
|
38,434
|
|
|
13,481
|
|
|
35.1
|
%
|
|
|
|
169,191
|
|
|
154,158
|
|
|
15,033
|
|
|
9.8
|
%
|
|
|
Golf balls
|
32,640
|
|
|
29,258
|
|
|
3,382
|
|
|
11.6
|
%
|
|
|
|
121,052
|
|
|
113,169
|
|
|
7,883
|
|
|
7.0
|
%
|
|
|
|
$
|
187,850
|
|
|
$
|
175,780
|
|
|
$
|
12,070
|
|
|
6.9
|
%
|
|
|
|
$
|
707,497
|
|
|
$
|
690,463
|
|
|
$
|
17,034
|
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by
Region
|
|
Net Sales by
Region
|
|
Three Months
Ended September
30,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs.
2015(1)
|
|
Nine Months
Ended September
30,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs.
2015(1)
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
92,943
|
|
|
$
|
86,980
|
|
|
$
|
5,963
|
|
|
6.9
|
%
|
|
6.9%
|
|
$
|
380,173
|
|
|
$
|
377,577
|
|
|
$
|
2,596
|
|
|
0.7
|
%
|
|
0.7%
|
Europe
|
26,347
|
|
|
26,699
|
|
|
(352)
|
|
|
(1.3)
|
%
|
|
6.1%
|
|
101,171
|
|
|
103,637
|
|
|
(2,466)
|
|
|
(2.4)
|
%
|
|
1.0%
|
Japan
|
41,358
|
|
|
33,623
|
|
|
7,735
|
|
|
23.0
|
%
|
|
2.9%
|
|
121,187
|
|
|
103,250
|
|
|
17,937
|
|
|
17.4
|
%
|
|
4.6%
|
Rest of
Asia
|
15,897
|
|
|
16,855
|
|
|
(958)
|
|
|
(5.7)
|
%
|
|
(8.7)%
|
|
51,843
|
|
|
52,340
|
|
|
(497)
|
|
|
(0.9)
|
%
|
|
2.3%
|
Other foreign
countries
|
11,305
|
|
|
11,623
|
|
|
(318)
|
|
|
(2.7)
|
%
|
|
(5.0)%
|
|
53,123
|
|
|
53,659
|
|
|
(536)
|
|
|
(1.0)
|
%
|
|
3.5%
|
|
$
|
187,850
|
|
|
$
|
175,780
|
|
|
$
|
12,070
|
|
|
6.9
|
%
|
|
3.7%
|
|
$
|
707,497
|
|
|
$
|
690,463
|
|
|
$
|
17,034
|
|
|
2.5
|
%
|
|
1.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2015 exchange rates to 2016 reported sales
in regions outside the U.S
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
|
|
Operating Segment
Information
|
|
|
|
Three Months
Ended September
30,
|
|
Growth/(Decline)
|
|
|
|
Nine Months
Ended September
30,
|
|
Growth
|
|
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percent
|
|
|
|
2016
|
|
2015
|
|
Dollars
|
|
Percent
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf Club
|
$
|
155,210
|
|
|
$
|
146,522
|
|
|
$
|
8,688
|
|
|
5.9
|
%
|
|
|
|
$
|
586,445
|
|
|
$
|
577,294
|
|
|
$
|
9,151
|
|
|
1.6
|
%
|
|
|
Golf Ball
|
32,640
|
|
|
29,258
|
|
|
3,382
|
|
|
11.6
|
%
|
|
|
|
121,052
|
|
|
113,169
|
|
|
7,883
|
|
|
7.0
|
%
|
|
|
|
$
|
187,850
|
|
|
$
|
175,780
|
|
|
$
|
12,070
|
|
|
6.9
|
%
|
|
|
|
$
|
707,497
|
|
|
$
|
690,463
|
|
|
$
|
17,034
|
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf clubs
|
$
|
2,818
|
|
|
$
|
6,564
|
|
|
$
|
(3,746)
|
|
|
(57.1)
|
%
|
|
|
|
$
|
71,166
|
|
|
$
|
69,555
|
|
|
$
|
1,611
|
|
|
2.3
|
%
|
|
|
Golf balls
|
3,846
|
|
|
3,511
|
|
|
335
|
|
|
9.5
|
%
|
|
|
|
23,210
|
|
|
17,559
|
|
|
5,651
|
|
|
32.2
|
%
|
|
|
Reconciling
items(2)
|
(11,109)
|
|
|
(12,145)
|
|
|
1,036
|
|
|
(8.5)
|
%
|
|
|
|
(22,988)
|
|
|
(37,092)
|
|
|
14,104
|
|
|
(38.0)
|
%
|
|
|
|
$
|
(4,445)
|
|
|
$
|
(2,070)
|
|
|
$
|
(2,375)
|
|
|
114.7
|
%
|
|
|
|
$
|
71,388
|
|
|
$
|
50,022
|
|
|
$
|
21,366
|
|
|
42.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
2016
|
|
2015
|
|
|
2016
|
|
2016
|
|
2016
|
|
2015
|
|
|
As
Reported
|
|
As
Reported
|
|
|
As
Reported
|
|
Topgolf
Gain
|
|
Pro
Forma
|
|
As
Reported
|
|
Net sales
|
$
|
187,850
|
|
|
$
|
175,780
|
|
|
|
$
|
707,497
|
|
|
$
|
—
|
|
|
$
|
707,497
|
|
|
$
|
690,463
|
|
|
Gross
profit
|
78,875
|
|
|
77,602
|
|
|
|
321,900
|
|
|
—
|
|
|
321,900
|
|
|
306,565
|
|
|
% of sales
|
42.0
|
%
|
|
44.1
|
%
|
|
|
45.5
|
%
|
|
—
|
|
|
45.5
|
%
|
|
44.4
|
%
|
|
Operating
expenses
|
84,140
|
|
|
76,835
|
|
|
|
260,969
|
|
|
—
|
|
|
260,969
|
|
|
250,274
|
|
|
Income (loss) from
operations
|
(5,265)
|
|
|
767
|
|
|
|
60,931
|
|
|
—
|
|
|
60,931
|
|
|
56,291
|
|
|
Other income
(expense), net
|
820
|
|
|
(2,837)
|
|
|
|
10,457
|
|
|
17,662
|
|
|
(7,205)
|
|
|
(6,269)
|
|
|
Income (loss) before
income taxes
|
(4,445)
|
|
|
(2,070)
|
|
|
|
71,388
|
|
|
17,662
|
|
|
53,726
|
|
|
50,022
|
|
|
Income tax
provision
|
1,294
|
|
|
1,547
|
|
|
|
4,632
|
|
|
—
|
|
|
4,632
|
|
|
5,002
|
|
|
Net income
(loss)
|
(5,739)
|
|
|
(3,617)
|
|
|
|
66,756
|
|
|
17,662
|
|
|
49,094
|
|
|
45,020
|
|
|
Less: Net income
attributable to non-controlling interests
|
127
|
|
|
—
|
|
|
|
127
|
|
|
—
|
|
|
127
|
|
|
—
|
|
|
Net income (loss)
attributable to Callaway Golf Company
|
$
|
(5,866)
|
|
|
$
|
(3,617)
|
|
|
|
$
|
66,629
|
|
|
$
|
17,662
|
|
|
$
|
48,967
|
|
|
$
|
45,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share:
|
$
|
(0.06)
|
|
|
$
|
(0.04)
|
|
|
|
$
|
0.70
|
|
|
$
|
0.18
|
|
|
$
|
0.52
|
|
|
$
|
0.53
|
|
|
Weighted-average
shares outstanding:
|
94,081
|
|
|
83,875
|
|
|
|
95,687
|
|
|
95,687
|
|
|
95,687
|
|
|
94,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 Trailing
Twelve Month Adjusted EBITDA
|
|
2015 Trailing
Twelve Month Adjusted EBITDA
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
|
|
2015
|
|
2016
|
|
2016
|
|
2016
|
|
Total
|
|
2014
|
|
2015
|
|
2015
|
|
2015
|
|
Total
|
Net income
(loss)
|
$
|
(30,452)
|
|
|
$
|
38,390
|
|
|
$
|
34,105
|
|
|
$
|
(5,866)
|
|
|
$
|
36,177
|
|
|
$
|
(41,539)
|
|
|
$
|
35,819
|
|
|
$
|
12,818
|
|
|
$
|
(3,617)
|
|
|
$
|
3,481
|
|
Interest expense,
net
|
868
|
|
|
621
|
|
|
347
|
|
|
431
|
|
|
2,267
|
|
|
1,764
|
|
|
2,021
|
|
|
1,936
|
|
|
3,520
|
|
|
9,241
|
|
Income tax
provision
|
493
|
|
|
1,401
|
|
|
1,937
|
|
|
1,294
|
|
|
5,125
|
|
|
1,980
|
|
|
1,638
|
|
|
1,817
|
|
|
1,547
|
|
|
6,982
|
|
Depreciation and
amortization expense
|
4,029
|
|
|
4,157
|
|
|
4,180
|
|
|
4,204
|
|
|
16,570
|
|
|
4,857
|
|
|
4,703
|
|
|
4,454
|
|
|
4,193
|
|
|
18,207
|
|
EBITDA
|
$
|
(25,062)
|
|
|
$
|
44,569
|
|
|
$
|
40,569
|
|
|
$
|
63
|
|
|
$
|
60,139
|
|
|
$
|
(32,938)
|
|
|
$
|
44,181
|
|
|
$
|
21,025
|
|
|
$
|
5,643
|
|
|
$
|
37,911
|
|
Gain on sale of
Topgolf investments
|
—
|
|
|
—
|
|
|
17,662
|
|
|
—
|
|
|
17,662
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
(25,062)
|
|
|
$
|
44,569
|
|
|
$
|
22,907
|
|
|
$
|
63
|
|
|
$
|
42,477
|
|
|
$
|
(32,938)
|
|
|
$
|
44,181
|
|
|
$
|
21,025
|
|
|
$
|
5,643
|
|
|
$
|
37,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Logo - http://photos.prnewswire.com/prnh/20091203/CGLOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/callaway-golf-company-announces-third-quarter-2016-financial-results-including-a-69-increase-in-net-sales-continues-to-realize-benefits-from-operational-improvements-and-increases-2016-full-year-earnings-guidance-300357154.html
SOURCE Callaway Golf Company