|Callaway Golf Company Announces Second Quarter And First Half 2013 Earnings Growth; Provides Revised Guidance; And Confirms Turnaround Plan Is On Track|
Despite softer than expected market conditions in the golf industry, the Company's results include 6% sales growth for the first half of 2013, and 1% sales growth for the second quarter of 2013, both on a constant currency basis on its current business, which excludes the brands and businesses that in 2012 were sold or transitioned to a third party model. The Company's GAAP sales results reflect the impact of the sold or transitioned businesses, which negatively impacted GAAP sales comparisons by approximately
The Company's improved brand momentum, operating efficiencies and cost management enabled the Company to overcome the softer than expected market conditions, adverse effects of the changes in foreign currency rates, and the impact of the sold or transitioned businesses. As a result, the Company reported improvements in operating income and earnings per share on a GAAP and non-GAAP basis for both the first half of 2013 and second quarter of 2013 as compared to the same periods in 2012.
For the second quarter of 2013, the Company reported the following GAAP results:
For the first half of 2013, the Company reported the following GAAP results:
NON-GAAP FINANCIAL RESULTS.
In addition to the Company's results prepared in accordance with GAAP, the Company has also provided additional information concerning its results on a non-GAAP basis. The manner in which the 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 this non-GAAP information to the most directly comparable GAAP information.
For the second quarter of 2013, the Company reported the following non-GAAP results:
For the first half of 2013, the Company reported the following non-GAAP results:
"We are pleased with the results for the second quarter and first half of the year, with continued gains in market share in most major markets driving an increase in sales on a constant currency, continuing business basis of 1% and 6% respectively," commented
"Our new products, and in particular our X Hot line of woods and irons, have resonated well this year with consumers globally," continued Mr. Brewer. "Additionally, we are equally excited about the new products being introduced during the second half of this year, which include the new OptiForce driver and fairway woods, the Mack Daddy 2 wedges designed by
Because of softer than expected market conditions and increased promotional activity, the Company is revising its full year financial guidance. The Company is currently providing the following revised guidance for the full year 2013:
*Note: The non-GAAP estimates of earnings/loss exclude for 2013 carryover charges related to the Company's 2012 cost-reduction initiatives and exclude for 2012 gains and charges related to the sale of the Top-Flite/Ben Hogan brands and the 2012 cost-reduction initiatives. The non-GAAP estimates for both 2013 and 2012 are based upon an assumed tax rate of 38.5% for comparative purposes because the GAAP tax rates are not directly correlated to the Company's pre-tax results due to the effect of the Company's deferred tax valuation allowance.
Conference Call and Webcast
The Company will be holding a conference call at
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
Constant Currency Basis. The Company provided certain information regarding the Company's net sales or projected net sales 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 net sales 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 rates on the Company's results or business.
Excluded Items. The Company presented certain of the Company's financial results excluding (i) the gain recognized in connection with the sale of the Top-Flite and Ben Hogan brands, (ii) charges related to the 2012 cost-reduction initiatives, or (iii) sales related to the Top-Flite and Ben Hogan brands or the products that were transitioned in 2012 to a third party model, including U.S. apparel and footwear.
Adjusted EBITDA. The Company provided information about its results, excluding interest, taxes, depreciation and amortization expenses, and impairment charges ("Adjusted EBITDA").
Assumed Tax Rate. As a result of the Company's previously reported deferred tax valuation allowance that was first established in 2011, the Company's GAAP tax rate is not directly correlated to the Company's pre-tax results. For comparative purposes, the Company has provided certain of the Company's income/loss and earnings/loss per share information and Adjusted EBITDA information based upon an assumed tax rate of 38.5%. The difference between the Company's actual tax rate and this assumed tax rate for historical periods is reflected on the attached schedules under "Non-Cash Tax Adjustment."
The non-GAAP information presented 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 this press release and 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 estimated 2013 sales, sales growth, pre-tax and net loss and loss per share for 2013, anticipated market conditions and promotional activity for the balance of 2013, the success of the Company's new products, the success of the Company's recovery/turnaround, and long-term outlook 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 delays, difficulties, or increased costs in implementing the 2012 cost-reduction initiatives; consumer acceptance of and demand for the Company's products; the level of promotional activity in the marketplace; future consumer discretionary purchasing activity, which can be significantly adversely affected by unfavorable economic or market conditions; 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 manufacturing the Company's products; adverse weather conditions and seasonality; any rule changes or other actions taken by the