CARLSBAD, Calif., Oct. 25, 2017 /PRNewswire/ -- Callaway Golf
Company (NYSE:ELY) announced today its third quarter 2017 financial
results and increased its full year 2017 net sales and earnings
guidance.
In the third quarter of 2017, as compared to the same period in
2016, the Company's net sales increased $56
million (30%) to $244 million.
This increase was led by increases in all operating segments,
namely Golf Clubs (+ 21%), Golf Balls (+20%), and Gear, Accessories
and Other (+72%) as well as increases in each reporting region,
namely the United States (+33%),
Europe (+23%), Japan (+28%), Rest of Asia (+28%), and other countries (+23%). The
increase in the Golf Clubs and Golf Balls segments reflects the
continued success of the Company's EPIC line of products as well as
the Chrome Soft golf ball franchise. The increase in Gear,
Accessories and Other primarily reflects the successful
acquisitions of the OGIO and TravisMathew brands which were
completed in 2017.
As a result of this significant increase in sales, as well as a
110 basis point improvement in gross margins, the Company
recognized a significant improvement in profitability during the
third quarter of 2017. Due to the seasonality of the Company's
business, the Company often reports a loss for the third quarter.
However, in the third quarter of 2017, the Company reported an
$11 million increase in operating
income to $6 million as compared to
an operating loss of ($5) million in
the third quarter of 2016. Furthermore, the Company's diluted
earnings per share increased $0.09 to
$0.03 for the third quarter of 2017
compared to a ($0.06) loss per share
for the comparable period of 2016.
"Our third quarter results continue what has been a tremendous
year for Callaway," commented Chip
Brewer, President and Chief Executive Officer of Callaway
Golf Company. "On a year-to-date basis compared to the same period
in 2016, our sales have increased $150
million (21%), our gross margins have increased 130 basis
points, and our Adjusted EBITDA has increased 69%. Furthermore, our
success over the last couple of years has allowed us to reinvest in
our business, including investments in our golf ball plant, and in
sales, marketing and research and development, and it has provided
us with the wherewithal to acquire the OGIO and TravisMathew
brands. We believe these investments and acquisitions will provide
benefits for years to come."
"Looking forward, we are pleased that our year-to-date
performance has allowed us to increase our full year sales and
earnings guidance," continued Mr. Brewer. "We also continue to be
cautiously optimistic about the golf industry overall, thanks to
what we believe are improving fundamentals. Lastly, our brand
momentum remains strong and we believe we are the #1 club and # 1
hard goods market share brand in every major region around the
world."
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 certain non-recurring items and on a
more comparable tax basis as described below.
This non-GAAP information presents the Company's financial
results for the third quarter and first nine months of 2017
excluding the non-recurring deal-related expenses for the OGIO and
TravisMathew acquisitions.
Additionally, the first nine months presentation of non-GAAP
results excludes from the 2016 results a gain of $18 million from the sale of a small portion of
the Company's Topgolf investment. Lastly, because of the Company's
prior deferred tax valuation allowance, the Company did not
recognize U.S. income tax expense during the first nine months of
2016 and its income tax provision and after-tax income and earnings
are therefore not calculated on the same basis as in the first nine
months of 2017. In order to make 2016 more comparable to 2017 for
evaluation purposes, the Company has also presented 2016 interim
period results on a non-GAAP basis by applying an estimated income
tax rate of 38.5%. Most of 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 and TravisMathew deal-related 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 Third Quarter 2017 Financial Results
The Company announced the following GAAP and non-GAAP financial
results for the third quarter of 2017 (in millions, except gross
margin and EPS):
2017 RESULTS
(GAAP)
|
|
NON-GAAP
PRESENTATION
|
|
Q3
2017
|
Q3 2016
|
Change
|
|
Q3
2017 non-GAAP
|
Q3 2016
non-GAAP
|
Change
|
Net Sales
|
$244
|
$188
|
$56
|
|
$244
|
$188
|
$56
|
Gross
Profit Gross Margin
|
$105 43.1%
|
$79 42.0%
|
$26 110
b.p.
|
|
$106 43.4%
|
$79 42.0%
|
$27 140
b.p.
|
Operating
Expenses
|
$99
|
$84
|
$15
|
|
$96
|
$84
|
$12
|
Operating
Income/(Loss)
|
$6
|
($5)
|
$11
|
|
$9
|
($5)
|
$14
|
Income Tax
Provision
|
$1
|
$1
|
$0
|
|
$3
|
($2)
|
$5
|
Net
Income/(Loss)
|
$3
|
($6)
|
$9
|
|
$5
|
($3)
|
$8
|
Diluted
EPS
|
$0.03
|
($0.06)
|
$0.09
|
|
$0.05
|
($0.03)
|
$0.08
|
|
|
|
|
Q3 2017
|
Q3 2016
|
Change
|
|
|
|
|
Adjusted
EBITDA
|
$13
|
$0
|
$13
|
|
|
For the third quarter of 2017, the Company's net sales increased
$56 million to $244 million compared to $188 million for the same period in 2016. The 30%
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, and increased net sales of gear, accessories and other
primarily as a result of the Company's recent acquisitions of OGIO
and TravisMathew. For the fourth consecutive quarter, net
sales increased in all major regions and reflected market share
gains in those regions.
For the third quarter of 2017, the Company's gross margin was
43.1% compared to third quarter 2016 gross margin of 42.0%. The 110
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.
Operating expenses increased $15
million to $99 million in the
third quarter of 2017 compared to $84
million for the same period in 2016. This increase is
primarily due to the addition in 2017 of operating expenses from
the consolidation of the OGIO and TravisMathew businesses, higher
variable expense due to the increase in sales and $3 million in TravisMathew and OGIO non-recurring
deal-related expenses.
Third quarter 2017 earnings per share was $0.03, compared to a loss per share of
($0.06) for the third quarter of
2016. On a non-GAAP basis, which excludes the impact of the
non-recurring OGIO and TravisMathew deal-related expenses 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 third quarter of 2017 of $0.05, compared to a loss per share of
($0.03) for the third quarter of
2016.
Summary of First Nine Months 2017 Financial Results
The Company announced the following GAAP and non-GAAP financial
results for the first nine months of 2017 (in millions, except
gross margin and EPS):
2017 RESULTS
(GAAP)
|
|
NON-GAAP
PRESENTATION
|
|
Q3 YTD
2017
|
Q3
YTD 2016
|
Change
|
|
Q3 YTD
2017 non-GAAP
|
Q3 YTD 2016
non-GAAP
|
Change
|
Net Sales
|
$857
|
$707
|
$150
|
|
$857
|
$707
|
$150
|
Gross
Profit Gross Margin
|
$401 46.8%
|
$322 45.5%
|
$79 130
b.p.
|
|
$402 46.9%
|
$322 45.5%
|
$80 140
b.p.
|
Operating
Expenses
|
$301
|
$261
|
$40
|
|
$293
|
$261
|
$32
|
Operating
Income
|
$99
|
$61
|
$38
|
|
$109
|
$61
|
$48
|
Income Tax
Provision
|
$31
|
$5
|
$26
|
|
$34
|
$21
|
$13
|
Net Income
|
$60
|
$67
|
($7)
|
|
$67
|
$33
|
$34
|
Diluted
EPS
|
$0.62
|
$0.70
|
($0.08)
|
|
$0.69
|
$0.34
|
$0.35
|
|
|
|
|
Q3 YTD
2017
|
Q3 YTD
2016
|
Change
|
|
|
|
|
Adjusted
EBITDA
|
$115
|
$68
|
$47
|
|
|
For the first nine months of 2017, the Company's net sales
increased $150 million to
$857 million compared to $707 million for the same period in 2016. The 21%
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, and increased gear, accessories and other primarily as a
result of the Company's acquisitions of TravisMathew, OGIO and the
Company's apparel joint venture in Japan which was formed in July 2016. In the first nine months of 2017, net
sales increased in all major regions and reflected market share
gains in those regions.
For the first nine months of 2017, the Company's gross margin
increased to 46.8% compared to 45.5% for the same period in 2016.
The 130 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.
Operating expenses increased $40
million to $301 million in the
first nine months of 2017 compared to $261
million for the same period in 2016. This increase is
primarily due to the addition in 2017 of operating expenses from
the Japan apparel joint venture
(which was formed in July 2016),
higher variable expense due to the increase in sales and the
consolidation of the OGIO and TravisMathew businesses, as well as
$10 million in TravisMathew and OGIO
non-recurring deal-related expenses.
The first nine months 2017 earnings per share was $0.62, compared to $0.70 for the first nine months of 2016.
The decrease on a GAAP basis was caused by the $10 million of TravisMathew and OGIO
non-recurring deal-related expenses in the first nine months of
2017, the $18 million Topgolf gain in
the second quarter of 2016 and the difference in effective tax
rates as the Company did not recognize U.S income tax in the first
nine months of 2016 due to the Company's prior valuation
allowance. On a non-GAAP basis, which excludes the impact of
the TravisMathew and OGIO non-recurring 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 first nine months of 2017 of
$0.69, compared to earnings per share
of $0.34 for the first nine months of
2016.
Business Outlook for 2017
Basis for 2017 Non-GAAP Estimates. The Company's 2017
non-GAAP estimates exclude non-recurring deal-related expenses for
the TravisMathew and OGIO acquisitions, which are estimated to be
approximately $12 million for full
year 2017. The amount incurred in the first nine months of 2017 was
$10 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 most of the
deferred tax valuation allowance and applied an actual 41.3% tax
rate for 2016.
Given the Company's strong financial performance during the
third quarter of 2017 and the closing of the TravisMathew
acquisition, 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
|
August 3,
2017 Non-GAAP
Estimate**
|
2016
Pro Forma
Results
|
Net Sales
|
$1,030 -
$1,040
|
$1,030 -
$1,040
|
$980 -
$995
|
$871
|
Gross
Margin
|
45.6%
|
45.8%
|
45.8%
|
44.2%
|
Operating
Expenses
|
$400
|
$390
|
381
|
$341
|
Earnings Per
Share
|
$0.39 -
$0.43
|
$0.47 -
$0.51
|
$0.40 -
$0.45
|
$0.24
|
**
This guidance was provided pre-acquisition and it did not
include any TravisMathew results. Upon acquiring TravisMathew, the
Company announced that TravisMathew was expected to provide in 2017
an additional $15 million in sales and would be $0.01
dilutive.
|
The Company currently estimates full year 2017 net sales of
$1,030 - $1,040 million, which
includes approximately $15-$20
million of TravisMathew sales. This would result in
net sales growth of 18% - 19% in 2017 compared to 2016. Incremental
sales growth versus previous estimates is expected to be driven
primarily by market share gains across all regions related to the
Company's 2017 product line, the TravisMathew business and changes
in foreign currency exchange rates. The Company currently estimates
that changes in foreign currency rates will adversely affect
projected 2017 net sales by approximately $10 million as compared to 2016 rates. The
Company previously estimated that changes in foreign currency rates
would adversely affect projected 2017 net sales by $12 million.
The Company currently estimates that its 2017 gross margin will
be in-line with the prior estimate. The Company estimates that its
2017 non-GAAP operating expenses will be $9
million higher than previous guidance due primarily to the
addition of the TravisMathew business and there also will be
slightly higher variable expense related to the projected increased
sales.
The Company increased its 2017 non-GAAP earnings per share
guidance to $0.47 - $0.51 due to the
projected increase in net sales. The Company's 2017 earnings per
share estimate assumes a tax rate of approximately 34.5% and a base
of 96.5 million shares.
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 Wednesday, November 1,
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, depreciation and
amortization expenses, as well as non-recurring OGIO and
TravisMathew deal-related expenses and the second quarter 2016 gain
realized from the sale of a small portion of the Company's Topgolf
investment.
Other Adjustments. The Company presents certain of its
financial results (i) excluding 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 and
TravisMathew deal-related expenses and (iv) by applying an assumed
estimated statutory tax rate of 38.5% to interim period results for
2016.
In addition, the Company has included in the schedules to this
release a reconciliation of certain non-GAAP information to the
most directly comparable GAAP information. The non-GAAP
information presented in this release and related schedules should
not be considered in isolation or as a substitute for any measure
derived in accordance with GAAP. The non-GAAP information may also
be inconsistent with the manner in which similar measures are
derived or used by other companies. Management uses such
non-GAAP information for financial and operational decision-making
purposes and as a means to evaluate period-over-period comparisons
and in forecasting the Company's business going forward. Management
believes that the presentation of such non-GAAP information, when
considered in conjunction with the most directly comparable GAAP
information, provides additional useful comparative information for
investors in their assessment of the underlying performance of the
Company's business without regard to these items. The Company has
provided reconciling information in the attached schedules.
Forward-Looking Statements
Statements used in this press release that relate to future
plans, events, financial results, performance or prospects,
including statements relating to the Company's estimated 2017
sales, gross margins, operating expenses, and earnings per share
(or related tax rate and share count), future industry or market
conditions, and the assumed benefits to be derived from investments
in the Company's core business or the OGIO and TravisMathew
acquisitions, are forward-looking statements as defined under the
Private Securities Litigation Reform Act of 1995. These statements
are based upon current information and expectations. Accurately
estimating the forward-looking statements is based upon various
risks and unknowns, including unanticipated delays, difficulties or
increased costs in integrating the acquired OGIO and TravisMathew
businesses or implementing the Company's growth strategy generally,
any unfavorable changes in U.S. trade, tax or other policies,
including restrictions on imports or an increase in import tariffs;
consumer acceptance of and demand for the Company's products; the
level of promotional activity in the marketplace; unfavorable
weather conditions; future consumer discretionary purchasing
activity, which can be significantly adversely affected by
unfavorable economic or market conditions; future retailer
purchasing activity, which can be significantly negatively affected
by adverse industry conditions and overall retail inventory levels;
and future changes in foreign currency exchange rates and the
degree of effectiveness of the Company's hedging programs. Actual
results may differ materially from those estimated or anticipated
as a result of these risks and unknowns or other risks and
uncertainties, including continued compliance with the terms of the
Company's credit facilities; delays, difficulties or increased
costs in the supply of components or commodities needed to
manufacture the Company's products or in manufacturing the
Company's products; the ability to secure professional tour player
endorsements at reasonable costs; any rule changes or other actions
taken by the USGA or other golf association that could have an
adverse impact upon demand or supply of the Company's products; a
decrease in participation levels in golf; and the effect of
terrorist activity, armed conflict, natural disasters or pandemic
diseases on the economy generally, on the level of demand for the
Company's products or on the Company's ability to manage its supply
and delivery logistics in such an environment. For additional
information concerning these and other risks and uncertainties that
could affect these statements, the golf industry, and the Company's
business, see the Company's Annual Report on Form 10-K for the year
ended December 31, 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®, OGIO and
TravisMathewbrands worldwide. For more information please visit
www.callawaygolf.com, www.odysseygolf.com,
www.ogio.com, and
www.travismathew.com.
Contacts:
|
Brian
Lynch
|
|
Patrick
Burke
|
|
(760)
931-1771
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
|
(Unaudited)
|
(In
thousands)
|
|
|
September 30,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
82,021
|
|
|
|
$
|
125,975
|
|
Accounts receivable,
net
|
|
152,420
|
|
|
|
127,863
|
|
Inventories
|
|
186,585
|
|
|
|
189,400
|
|
Other current
assets
|
|
25,575
|
|
|
|
17,187
|
|
Total current
assets
|
|
446,601
|
|
|
|
460,425
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
65,906
|
|
|
|
54,475
|
|
Intangible assets,
net
|
|
280,442
|
|
|
|
114,324
|
|
Deferred taxes,
net
|
|
83,149
|
|
|
|
114,707
|
|
Investment in
golf-related venture
|
|
50,495
|
|
|
|
48,997
|
|
Other
assets
|
|
9,390
|
|
|
|
8,354
|
|
Total
assets
|
|
$
|
935,983
|
|
|
|
$
|
801,282
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
140,572
|
|
|
|
$
|
132,521
|
|
Accrued employee
compensation and benefits
|
|
34,830
|
|
|
|
32,568
|
|
Asset-based credit
facilities
|
|
70,618
|
|
|
|
11,966
|
|
Accrued warranty
expense
|
|
7,550
|
|
|
|
5,395
|
|
Income tax
liability
|
|
3,552
|
|
|
|
4,404
|
|
Total current
liabilities
|
|
257,122
|
|
|
|
186,854
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
6,709
|
|
|
|
5,828
|
|
Total Callaway Golf
Company shareholders' equity
|
|
663,005
|
|
|
|
598,906
|
|
Non-controlling
interest in consolidated entity
|
|
9,147
|
|
|
|
9,694
|
|
Total liabilities and
shareholders' equity
|
|
$
|
935,983
|
|
|
|
$
|
801,282
|
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
Three Months
Ended
September 30,
|
|
2017
|
|
2016
|
Net sales
|
$
|
243,604
|
|
|
$
|
187,850
|
|
Cost of
sales
|
138,702
|
|
|
108,975
|
|
Gross
profit
|
104,902
|
|
|
78,875
|
|
Operating
expenses:
|
|
|
|
Selling
|
65,754
|
|
|
55,869
|
|
General and
administrative
|
23,957
|
|
|
19,851
|
|
Research and
development
|
9,154
|
|
|
8,420
|
|
Total operating
expenses
|
98,865
|
|
|
84,140
|
|
Income (loss) from
operations
|
6,037
|
|
|
(5,265)
|
|
Other income
(expense), net
|
(1,462)
|
|
|
820
|
|
Income (loss) before
income taxes
|
4,575
|
|
|
(4,445)
|
|
Income tax
provision
|
1,486
|
|
|
1,294
|
|
Net income
(loss)
|
3,089
|
|
|
(5,739)
|
|
Less: Net income
attributable to non-controlling interest
|
29
|
|
|
127
|
|
Net income (loss)
attributable to Callaway Golf Company
|
$
|
3,060
|
|
|
$
|
(5,866)
|
|
|
|
|
|
Earnings (loss) per
common share:
|
|
|
|
Basic
|
$
|
0.03
|
|
|
$
|
(0.06)
|
|
Diluted
|
$
|
0.03
|
|
|
$
|
(0.06)
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
94,450
|
|
|
94,081
|
|
Diluted
|
96,879
|
|
|
94,081
|
|
|
|
|
|
|
Nine Months
Ended
September 30,
|
|
2017
|
|
2016
|
Net sales
|
$
|
857,079
|
|
|
$
|
707,497
|
|
Cost of
sales
|
456,297
|
|
|
385,597
|
|
Gross
profit
|
400,782
|
|
|
321,900
|
|
Operating
expenses:
|
|
|
|
Selling
|
205,618
|
|
|
183,543
|
|
General and
administrative
|
68,976
|
|
|
52,484
|
|
Research and
development
|
26,899
|
|
|
24,942
|
|
Total operating
expenses
|
301,493
|
|
|
260,969
|
|
Income from
operations
|
99,289
|
|
|
60,931
|
|
Gain on sale of
investment in golf-related venture
|
—
|
|
|
17,662
|
|
Other expense,
net
|
(8,104)
|
|
|
(7,205)
|
|
Income before income
taxes
|
91,185
|
|
|
71,388
|
|
Income tax
provision
|
30,742
|
|
|
4,632
|
|
Net income
|
60,443
|
|
|
66,756
|
|
Less: Net income
attributable to non-controlling interest
|
251
|
|
|
127
|
|
Net income
attributable to Callaway Golf Company
|
$
|
60,192
|
|
|
$
|
66,629
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
|
0.64
|
|
|
$
|
0.71
|
|
Diluted
|
$
|
0.62
|
|
|
$
|
0.70
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
94,246
|
|
|
94,021
|
|
Diluted
|
96,343
|
|
|
95,687
|
|
CALLAWAY GOLF
COMPANY
|
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOW
|
(Unaudited)
|
(In
thousands)
|
|
|
Nine Months
Ended
September 30,
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
60,443
|
|
|
$
|
66,756
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
12,806
|
|
|
12,541
|
|
Inventory step-up
from acquisitions
|
1,701
|
|
|
—
|
|
Deferred taxes,
net
|
32,586
|
|
|
(370)
|
|
Share-based
compensation
|
9,583
|
|
|
6,465
|
|
Loss (gain) on
disposal of long-lived assets and deferred gain
amortization
|
1,035
|
|
|
(117)
|
|
Gain on sale of
investment in golf-related venture
|
—
|
|
|
(17,662)
|
|
Unrealized loss on
foreign currency forward contracts
|
1,373
|
|
|
2,880
|
|
Changes in assets and
liabilities
|
(8,742)
|
|
|
15,128
|
|
Net cash provided by
operating activities
|
110,785
|
|
|
85,621
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Acquisition, net of
cash acquired
|
(181,824)
|
|
|
—
|
|
Capital
expenditures
|
(16,846)
|
|
|
(12,163)
|
|
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
|
(1,499)
|
|
|
(1,560)
|
|
Net cash (used in)
provided by investing activities
|
(199,609)
|
|
|
12,830
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
(repayments of) asset-based credit facilities, net
|
58,652
|
|
|
(14,969)
|
|
Acquisition of
treasury stock
|
(16,479)
|
|
|
(5,133)
|
|
Dividends
paid
|
(2,827)
|
|
|
(2,822)
|
|
Exercise of stock
options
|
4,205
|
|
|
2,625
|
|
Distribution to
non-controlling interest
|
(974)
|
|
|
—
|
|
Net cash provided by
(used in) financing activities
|
42,577
|
|
|
(20,299)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
2,293
|
|
|
(3,325)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(43,954)
|
|
|
74,827
|
|
Cash and cash
equivalents at beginning of period
|
125,975
|
|
|
49,801
|
|
Cash and cash
equivalents at end of period
|
$
|
82,021
|
|
|
$
|
124,628
|
|
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)
|
|
Non-GAAP Constant Currency vs. 2016(2)
|
|
Nine Months
Ended
September 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
|
$
|
65,846
|
|
|
$
|
39,332
|
|
|
$
|
26,514
|
|
|
67.4%
|
|
70.8%
|
|
$
|
262,697
|
|
|
$
|
183,162
|
|
|
$
|
79,535
|
|
|
43.4%
|
|
45.1%
|
Irons
|
60,830
|
|
|
64,305
|
|
|
(3,475)
|
|
|
-5.4%
|
|
-4.8%
|
|
202,126
|
|
|
224,363
|
|
|
(22,237)
|
|
|
-9.9%
|
|
-9.0%
|
Putters
|
19,437
|
|
|
17,591
|
|
|
1,846
|
|
|
10.5%
|
|
12.0%
|
|
71,172
|
|
|
73,215
|
|
|
(2,043)
|
|
|
-2.8%
|
|
-1.8%
|
Golf balls
|
39,071
|
|
|
32,640
|
|
|
6,431
|
|
|
19.7%
|
|
19.6%
|
|
136,062
|
|
|
121,052
|
|
|
15,010
|
|
|
12.4%
|
|
13.0%
|
Gear/Accessories/Other
|
58,420
|
|
|
33,982
|
|
|
24,438
|
|
|
71.9%
|
|
76.5%
|
|
185,022
|
|
|
105,705
|
|
|
79,317
|
|
|
75.0%
|
|
77.5%
|
|
$
|
243,604
|
|
|
$
|
187,850
|
|
|
$
|
55,754
|
|
|
29.7%
|
|
31.5%
|
|
$
|
857,079
|
|
|
$
|
707,497
|
|
|
$
|
149,582
|
|
|
21.1%
|
|
22.4%
|
(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
September 30,
|
|
Growth
|
|
Non-GAAP Constant Currency vs. 2016(1)
|
|
Nine Months
Ended
September 30,
|
|
Growth
|
|
Non-GAAP Constant Currency vs. 2016(1)
|
|
2017
|
|
2016
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
2017
|
|
2016
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
123,817
|
|
|
$
|
92,943
|
|
|
$
|
30,874
|
|
|
33.2%
|
|
33.2%
|
|
$
|
472,052
|
|
|
$
|
380,173
|
|
|
$
|
91,879
|
|
|
24.2%
|
|
24.2%
|
Europe
|
32,470
|
|
|
26,347
|
|
|
6,123
|
|
|
23.2%
|
|
20.5%
|
|
118,566
|
|
|
101,171
|
|
|
17,395
|
|
|
17.2%
|
|
22.4%
|
Japan
|
53,062
|
|
|
41,358
|
|
|
11,704
|
|
|
28.3%
|
|
38.8%
|
|
147,431
|
|
|
121,187
|
|
|
26,244
|
|
|
21.7%
|
|
25.9%
|
Rest of
Asia
|
20,384
|
|
|
15,897
|
|
|
4,487
|
|
|
28.2%
|
|
29.1%
|
|
62,963
|
|
|
51,843
|
|
|
11,120
|
|
|
21.4%
|
|
19.8%
|
Other foreign
countries
|
13,871
|
|
|
11,305
|
|
|
2,566
|
|
|
22.7%
|
|
20.0%
|
|
56,067
|
|
|
53,123
|
|
|
2,944
|
|
|
5.5%
|
|
4.9%
|
|
$
|
243,604
|
|
|
$
|
187,850
|
|
|
$
|
55,754
|
|
|
29.7%
|
|
31.5%
|
|
$
|
857,079
|
|
|
$
|
707,497
|
|
|
$
|
149,582
|
|
|
21.1%
|
|
22.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
September 30,
|
|
Growth
|
|
|
|
Nine Months
Ended
September 30,
|
|
Growth
|
|
|
|
2017
|
|
2016(1)
|
|
Dollars
|
|
Percent
|
|
|
|
2017
|
|
2016(1)
|
|
Dollars
|
|
Percent
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf Club
|
$
|
146,113
|
|
|
$
|
121,228
|
|
|
$
|
24,885
|
|
|
20.5%
|
|
|
|
$
|
535,995
|
|
|
$
|
480,740
|
|
|
$
|
55,255
|
|
|
11.5%
|
|
|
Golf Ball
|
39,071
|
|
|
32,640
|
|
|
6,431
|
|
|
19.7%
|
|
|
|
136,062
|
|
|
121,052
|
|
|
15,010
|
|
|
12.4%
|
|
|
Gear/Accessories/Other
|
58,420
|
|
|
33,982
|
|
|
24,438
|
|
|
71.9%
|
|
|
|
185,022
|
|
|
105,705
|
|
|
79,317
|
|
|
75.0%
|
|
|
|
$
|
243,604
|
|
|
$
|
187,850
|
|
|
$
|
55,754
|
|
|
29.7%
|
|
|
|
$
|
857,079
|
|
|
$
|
707,497
|
|
|
$
|
149,582
|
|
|
21.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf clubs
|
$
|
10,420
|
|
|
$
|
2,224
|
|
|
$
|
8,196
|
|
|
368.5%
|
|
|
|
$
|
83,818
|
|
|
$
|
55,638
|
|
|
$
|
28,180
|
|
|
50.6%
|
|
|
Golf balls
|
5,040
|
|
|
3,845
|
|
|
1,195
|
|
|
31.1%
|
|
|
|
27,500
|
|
|
21,985
|
|
|
5,515
|
|
|
25.1%
|
|
|
Gear/Accessories/Other
|
6,420
|
|
|
595
|
|
|
5,825
|
|
|
979.0%
|
|
|
|
27,916
|
|
|
16,753
|
|
|
11,163
|
|
|
66.6%
|
|
|
Reconciling
items(2)
|
(17,305)
|
|
|
(11,109)
|
|
|
(6,196)
|
|
|
-55.8%
|
|
|
|
(48,049)
|
|
|
(22,988)
|
|
|
(25,061)
|
|
|
-109.0%
|
|
|
|
$
|
4,575
|
|
|
$
|
(4,445)
|
|
|
$
|
9,020
|
|
|
202.9%
|
|
|
|
$
|
91,185
|
|
|
$
|
71,388
|
|
|
$
|
19,797
|
|
|
27.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
September 30, 2017
|
|
Three months ended
September 30, 2016
|
|
|
As
Reported
|
|
Acquisition
Costs(1)
|
|
Non-GAAP
|
|
As
Reported
|
|
Non-Cash Tax
Adjustment(2)
|
|
Non-GAAP
|
|
Net sales
|
$
|
243,604
|
|
|
$
|
—
|
|
|
$
|
243,604
|
|
|
$
|
187,850
|
|
|
$
|
—
|
|
|
$
|
187,850
|
|
|
Gross
profit
|
104,902
|
|
|
(798)
|
|
|
105,700
|
|
|
78,875
|
|
|
—
|
|
|
78,875
|
|
|
% of sales
|
43.1
|
%
|
|
—
|
|
|
43.4
|
%
|
|
42.0
|
%
|
|
—
|
|
|
42.0
|
%
|
|
Operating
expenses
|
98,865
|
|
|
2,579
|
|
|
96,286
|
|
|
84,140
|
|
|
—
|
|
|
84,140
|
|
|
Income (loss) from
operations
|
6,037
|
|
|
(3,377)
|
|
|
9,414
|
|
|
(5,265)
|
|
|
—
|
|
|
(5,265)
|
|
|
Other income
(expense), net
|
(1,462)
|
|
|
—
|
|
|
(1,462)
|
|
|
820
|
|
|
—
|
|
|
820
|
|
|
Income (loss) before
income taxes
|
4,575
|
|
|
(3,377)
|
|
|
7,952
|
|
|
(4,445)
|
|
|
—
|
|
|
(4,445)
|
|
|
Income tax provision
(benefit)
|
1,486
|
|
|
(1,134)
|
|
|
2,620
|
|
|
1,294
|
|
|
3,005
|
|
|
(1,711)
|
|
|
Net income
(loss)
|
3,089
|
|
|
(2,243)
|
|
|
5,332
|
|
|
(5,739)
|
|
|
(3,005)
|
|
|
(2,734)
|
|
|
Less: Net income
attributable to non-controlling interest
|
29
|
|
|
—
|
|
|
29
|
|
|
127
|
|
|
—
|
|
|
127
|
|
|
Net income (loss)
attributable to Callaway Golf Company
|
$
|
3,060
|
|
|
$
|
(2,243)
|
|
|
$
|
5,303
|
|
|
$
|
(5,866)
|
|
|
$
|
(3,005)
|
|
|
$
|
(2,861)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
|
0.03
|
|
|
$
|
(0.02)
|
|
|
$
|
0.05
|
|
|
$
|
(0.06)
|
|
|
$
|
(0.03)
|
|
|
$
|
(0.03)
|
|
|
Weighted-average
shares outstanding:
|
96,879
|
|
|
96,879
|
|
|
96,879
|
|
|
94,081
|
|
|
94,081
|
|
|
94,081
|
|
|
|
(1)
|
Represents
non-recurring costs associated with the acquisitions of Ogio
International, Inc in January 2017, and TravisMathew in August
2017.
|
(2)
|
The Company had a
valuation allowance on its U.S. deferred tax assets in the third
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 third quarter of 2017, the
Company applied an estimated statutory tax rate of 38.5% to
calculate pro-forma results for the third quarter of
2016.
|
CALLAWAY GOLF
COMPANY
|
Supplemental
Financial Information and Non-GAAP Reconciliation
|
(Unaudited)
|
(In
thousands)
|
|
|
Nine Months Ended
September 30, 2017
|
|
Nine Months Ended
September 30, 2016
|
|
|
|
As
Reported
|
|
Acquisition
Costs(1)
|
|
Non-GAAP
|
|
As
Reported
|
|
Non-Cash Tax
Adjustment(2)
|
|
Topgolf
Gain(3)
|
|
Non-GAAP
|
|
|
Net sales
|
$
|
857,079
|
|
|
$
|
—
|
|
|
$
|
857,079
|
|
|
$
|
707,497
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
707,497
|
|
|
|
Gross
profit
|
400,782
|
|
|
(798)
|
|
|
401,580
|
|
|
321,900
|
|
|
—
|
|
|
—
|
|
|
321,900
|
|
|
|
% of sales
|
46.8
|
%
|
|
—
|
|
|
46.9
|
%
|
|
45.5
|
%
|
|
—
|
|
|
—
|
|
|
45.5
|
%
|
|
|
Operating
expenses
|
301,493
|
|
|
8,789
|
|
|
292,704
|
|
|
260,969
|
|
|
—
|
|
|
—
|
|
|
260,969
|
|
|
|
Income (loss) from
operations
|
99,289
|
|
|
(9,587)
|
|
|
108,876
|
|
|
60,931
|
|
|
—
|
|
|
—
|
|
|
60,931
|
|
|
|
Other income
(expense), net
|
(8,104)
|
|
|
—
|
|
|
(8,104)
|
|
|
10,457
|
|
|
—
|
|
|
17,662
|
|
|
(7,205)
|
|
|
|
Income (loss) before
income taxes
|
91,185
|
|
|
(9,587)
|
|
|
100,772
|
|
|
71,388
|
|
|
—
|
|
|
17,662
|
|
|
53,726
|
|
|
|
Income tax provision
(benefit)
|
30,742
|
|
|
(3,232)
|
|
|
33,974
|
|
|
4,632
|
|
|
(23,241)
|
|
|
7,188
|
|
|
20,685
|
|
|
|
Net income
(loss)
|
60,443
|
|
|
(6,355)
|
|
|
66,798
|
|
|
66,756
|
|
|
23,241
|
|
|
10,474
|
|
|
33,041
|
|
|
|
Less: Net income
attributable to non-controlling interest
|
251
|
|
|
—
|
|
|
251
|
|
|
127
|
|
|
—
|
|
|
—
|
|
|
127
|
|
|
|
Net income (loss)
attributable to Callaway Golf Company
|
$
|
60,192
|
|
|
$
|
(6,355)
|
|
|
$
|
66,547
|
|
|
$
|
66,629
|
|
|
$
|
23,241
|
|
|
$
|
10,474
|
|
|
$
|
32,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
|
0.62
|
|
|
$
|
(0.07)
|
|
|
$
|
0.69
|
|
|
$
|
0.70
|
|
|
$
|
0.25
|
|
|
$
|
0.11
|
|
|
$
|
0.34
|
|
|
|
Weighted-average
shares outstanding:
|
96,343
|
|
|
96,343
|
|
|
96,343
|
|
|
95,687
|
|
|
95,687
|
|
|
95,687
|
|
|
95,687
|
|
|
|
|
(1)
|
Represents
non-recurring costs associated with the acquisitions of Ogio
International, Inc in January 2017, and TravisMathew in August
2017.
|
(2)
|
The Company had a
valuation allowance on its U.S. deferred tax assets in the first
nine months of 2016, which resulted in federal U.S. tax expense for
the nine months ended September 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 nine months ended September 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 nine 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
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
|
|
2016
|
|
2017
|
|
2017
|
|
2017
|
|
Total
|
|
2015
|
|
2016
|
|
2016
|
|
2016
|
|
Total
|
Net income
(loss)
|
$
|
123,271
|
|
|
$
|
25,689
|
|
|
$
|
31,443
|
|
|
$
|
3,060
|
|
|
$
|
183,463
|
|
|
$
|
(30,452)
|
|
|
$
|
38,390
|
|
|
$
|
34,105
|
|
|
$
|
(5,866)
|
|
|
$
|
36,177
|
|
Interest expense,
net
|
348
|
|
|
715
|
|
|
550
|
|
|
642
|
|
|
2,255
|
|
|
868
|
|
|
621
|
|
|
347
|
|
|
431
|
|
|
2,267
|
|
Income tax provision
(benefit)
|
(137,193)
|
|
|
13,206
|
|
|
16,050
|
|
|
1,486
|
|
|
(106,451)
|
|
|
493
|
|
|
1,401
|
|
|
1,937
|
|
|
1,294
|
|
|
5,125
|
|
Depreciation and
amortization expense
|
4,045
|
|
|
4,319
|
|
|
4,178
|
|
|
4,309
|
|
|
16,851
|
|
|
4,029
|
|
|
4,157
|
|
|
4,180
|
|
|
4,204
|
|
|
16,570
|
|
EBITDA
|
$
|
(9,529)
|
|
|
$
|
43,929
|
|
|
$
|
52,221
|
|
|
$
|
9,497
|
|
|
$
|
96,118
|
|
|
$
|
(25,062)
|
|
|
$
|
44,569
|
|
|
$
|
40,569
|
|
|
$
|
63
|
|
|
$
|
60,139
|
|
Gain on sale of
Topgolf investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,662)
|
|
|
—
|
|
|
(17,662)
|
|
Ogio &
TravisMathew acquisition costs
|
—
|
|
|
3,956
|
|
|
2,254
|
|
|
3,377
|
|
|
9,587
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
(9,529)
|
|
|
$
|
47,885
|
|
|
$
|
54,475
|
|
|
$
|
12,874
|
|
|
$
|
105,705
|
|
|
$
|
(25,062)
|
|
|
$
|
44,569
|
|
|
$
|
22,907
|
|
|
$
|
63
|
|
|
$
|
42,477
|
|
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, and applies
an actual 41.3% tax rate for 2016.
|
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, 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
|
%
|
|
$
|
39,332
|
|
20.9
|
%
|
|
$
|
33,024
|
|
20.2
|
%
|
|
$
|
216,186
|
|
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
|
%
|
|
33,982
|
|
18.1
|
%
|
|
30,848
|
|
18.8
|
%
|
|
136,553
|
|
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-third-quarter-2017-financial-results-including-a-30-increase-in-net-sales-callaway-increases-full-year-net-sales-and-earnings-guidance-300543477.html
SOURCE Callaway Golf Company