Callaway Golf Company Announces Record Net Sales For The Third Quarter And First Nine Months Of 2018; Callaway Increases Full Year Net Sales And Earnings Guidance
In the third quarter of 2018, as compared to the same period in 2017, the Company's net sales increased
As a result of this better than expected quarter, the Company increased its full year sales guidance by
"The third quarter results continue what has been a tremendous year for Callaway," commented
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 non-recurring items. This non-GAAP information presents the Company's financial results for the third quarter and first nine months of 2017 excluding the non-recurring transaction and transition expenses related to the OGIO and TravisMathew acquisitions. 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 2018 Financial Results
The Company announced the following GAAP and non-GAAP financial results for the third quarter of 2018 (in millions, except EPS):
2018 RESULTS (GAAP) |
NON-GAAP PRESENTATION |
|||||||
Q3 |
Q3 2017 |
Change |
Q3 2018 GAAP |
Q3 2017 |
Change |
|||
Net Sales |
$263 |
$244 |
$19 |
$263 |
$244 |
$19 |
||
Gross Profit/ |
$115 43.9% |
$105 43.1% |
$10 80 bps |
$115 43.9% |
$106 43.4% |
$9 50 bps |
||
Operating Expenses |
$105 |
$99 |
$6 |
$105 |
$96 |
$9 |
||
Pre-Tax Income |
$11 |
$5 |
$6 |
$11 |
$8 |
$3 |
||
Income Tax Provision |
$1 |
$1 |
$0 |
$1 |
$3 |
$2 |
||
Net Income |
$10 |
$3 |
$7 |
$10 |
$5 |
$5 |
||
EPS |
$0.10 |
$0.03 |
$0.07 |
$0.10 |
$0.05 |
$0.05 |
||
Q3 2018 |
Q3 2017 |
Change |
|
Adj. EBITDA |
$17 |
$13 |
$4 |
For the third quarter of 2018, the Company's net sales increased
For the third quarter of 2018, the Company's gross margin increased 80 basis points to 43.9% compared to 43.1% for the third quarter of 2017. This increase was primarily driven by increased average selling prices, favorable product mix, and the TravisMathew business, which is accretive to gross margins, offset slightly by higher product costs due to more technologically advanced products.
Operating expenses increased
Third quarter 2018 earnings per share increased
Summary of First Nine Months 2018 Financial Results
The Company announced the following GAAP and non-GAAP financial results for the first nine months of 2018 (in millions, except EPS):
2018 RESULTS (GAAP) |
NON-GAAP PRESENTATION |
|||||||
Q3 YTD |
Q3 YTD 2017 |
Change |
Q3 YTD |
Q3 YTD |
Change |
|||
Net Sales |
$1,062 |
$857 |
$205 |
$1,062 |
$857 |
$205 |
||
Gross Profit/ |
$508 47.9% |
$401 46.8% |
$107 110 bps |
$508 47.9% |
$402 46.9% |
$106 100 bps |
||
Operating Expenses |
$337 |
$301 |
$36 |
$337 |
$293 |
$44 |
||
Pre-Tax Income |
$169 |
$91 |
$78 |
$169 |
$101 |
$68 |
||
Income Tax Provision |
$36 |
$31 |
$5 |
$36 |
$34 |
$2 |
||
Net Income |
$133 |
$60 |
$73 |
$133 |
$67 |
$66 |
||
EPS |
$1.37 |
$0.62 |
$0.75 |
$1.37 |
$0.69 |
$0.68 |
Q3 YTD 2018 |
Q3 YTD 2017 |
Change |
|
Adj. EBITDA |
$188 |
$115 |
$73 |
For the first nine months of 2018, the Company's net sales increased
For the first nine months of 2018, the Company's gross margin increased 110 basis points to 47.9% compared to 46.8% for the first nine months of 2017. This increase reflects an overall increase in average selling prices, the addition of the TravisMathew business, which is accretive to gross margins, and the net favorable translation impact of changes in foreign currency rates, partially offset by higher product costs as more technology is incorporated into the new product line.
Operating expenses increased
First nine months 2018 earnings per share increased
Business Outlook for 2018
Basis for 2017 Non-GAAP Results. In order to make the 2018 guidance more comparable to 2017, as discussed above, the Company has presented 2017 results on a non-GAAP basis by excluding from 2017 the non-recurring expenses related to the OGIO and TravisMathew acquisitions (
Full Year 2018
Given the Company's financial performance during the first nine months of 2018, the Company is increasing its full year 2018 financial guidance as follows:
Revised 2018 GAAP Estimate |
Previous 2018 GAAP Estimate |
2017 Non-GAAP |
|
Net Sales |
$1,230 - $1,240 million |
$1,210 - $1,225 million |
$1,049 million |
Gross Margins |
46.8% |
46.8% |
46.0% |
Operating Expenses |
$447 million |
$445 million |
$393 million |
Earnings Per Share |
$1.01 - $1.05 |
$0.95 - $1.00 |
$0.53 |
The Company's revised 2018 net sales estimate of
The Company estimates that its 2018 operating expenses will increase
The Company increased its GAAP earnings per share guidance to
Conference Call and Webcast
The Company will be holding a conference call at
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
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 transaction-related expenses.
Other Adjustments. The Company presents certain of its financial results (i) excluding the 2017 non-recurring OGIO and TravisMathew transaction-related expenses and (ii) excluding the 2017 non-cash, non-recurring tax adjustments.
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 2018 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 changes in U.S. trade, tax or other policies, including impacts of the 2017 Tax Cuts and Jobs Act or 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
About
Through an unwavering commitment to innovation,
Contacts: |
Brian Lynch |
Patrick Burke |
|
(760) 931-1771 |
CALLAWAY GOLF COMPANY |
|||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS |
|||||||||
(Unaudited) |
|||||||||
(In thousands) |
|||||||||
September 30, |
December 31, |
||||||||
ASSETS |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
70,821 |
$ |
85,674 |
|||||
Accounts receivable, net |
130,033 |
94,725 |
|||||||
Inventories |
237,472 |
262,486 |
|||||||
Other current assets |
34,790 |
23,099 |
|||||||
Total current assets |
473,116 |
465,984 |
|||||||
Property, plant and equipment, net |
82,074 |
70,227 |
|||||||
Intangible assets, net |
281,064 |
282,187 |
|||||||
Deferred taxes, net |
65,045 |
91,398 |
|||||||
Investment in golf-related ventures |
70,777 |
70,495 |
|||||||
Other assets |
10,625 |
10,866 |
|||||||
Total assets |
$ |
982,701 |
$ |
991,157 |
|||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||||
Current liabilities: |
|||||||||
Accounts payable and accrued expenses |
$ |
142,661 |
$ |
176,127 |
|||||
Accrued employee compensation and benefits |
38,425 |
40,173 |
|||||||
Asset-based credit facilities |
4,300 |
87,755 |
|||||||
Accrued warranty expense |
8,532 |
6,657 |
|||||||
Other current liabilities |
2,400 |
2,367 |
|||||||
Income tax liability |
10,827 |
1,295 |
|||||||
Total current liabilities |
207,145 |
314,374 |
|||||||
Long-term liabilities |
15,792 |
17,408 |
|||||||
Total Callaway Golf Company shareholders' equity |
750,727 |
649,631 |
|||||||
Non-controlling interest in consolidated entity |
9,037 |
9,744 |
|||||||
Total liabilities and shareholders' equity |
$ |
982,701 |
$ |
991,157 |
CALLAWAY GOLF COMPANY |
|||||||
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS |
|||||||
(Unaudited) |
|||||||
(In thousands, except per share data) |
|||||||
Three Months Ended |
|||||||
2018 |
2017 |
||||||
Net sales |
$ |
262,654 |
$ |
243,604 |
|||
Cost of sales |
147,415 |
138,702 |
|||||
Gross profit |
115,239 |
104,902 |
|||||
Operating expenses: |
|||||||
Selling |
68,605 |
65,754 |
|||||
General and administrative |
26,706 |
23,957 |
|||||
Research and development |
9,229 |
9,154 |
|||||
Total operating expenses |
104,540 |
98,865 |
|||||
Income from operations |
10,699 |
6,037 |
|||||
Other income (expense), net |
376 |
(1,462) |
|||||
Income before income taxes |
11,075 |
4,575 |
|||||
Income tax provision |
1,335 |
1,486 |
|||||
Net income |
9,740 |
3,089 |
|||||
Less: Net income attributable to non-controlling interest |
223 |
29 |
|||||
Net income attributable to Callaway Golf Company |
$ |
9,517 |
$ |
3,060 |
|||
Earnings per common share: |
|||||||
Basic |
$ |
0.10 |
$ |
0.03 |
|||
Diluted |
$ |
0.10 |
$ |
0.03 |
|||
Weighted-average common shares outstanding: |
|||||||
Basic |
94,477 |
94,450 |
|||||
Diluted |
97,320 |
96,879 |
|||||
Nine Months Ended September 30, |
|||||||
2018 |
2017 |
||||||
Net sales |
$ |
1,062,156 |
$ |
857,079 |
|||
Cost of sales |
553,758 |
456,297 |
|||||
Gross profit |
508,398 |
400,782 |
|||||
Operating expenses: |
|||||||
Selling |
234,826 |
205,618 |
|||||
General and administrative |
73,008 |
68,976 |
|||||
Research and development |
29,561 |
26,899 |
|||||
Total operating expenses |
337,395 |
301,493 |
|||||
Income from operations |
171,003 |
99,289 |
|||||
Other expense, net |
(1,797) |
(8,104) |
|||||
Income before income taxes |
169,206 |
91,185 |
|||||
Income tax provision |
35,801 |
30,742 |
|||||
Net income |
133,405 |
60,443 |
|||||
Less: Net income attributable to non-controlling interest |
166 |
251 |
|||||
Net income attributable to Callaway Golf Company |
$ |
133,239 |
$ |
60,192 |
|||
Earnings per common share: |
|||||||
Basic |
$1.41 |
$0.64 |
|||||
Diluted |
$1.37 |
$0.62 |
|||||
Weighted-average common shares outstanding: |
|||||||
Basic |
94,605 |
94,246 |
|||||
Diluted |
97,076 |
96,343 |
CALLAWAY GOLF COMPANY |
|||||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW |
|||||||
(Unaudited) |
|||||||
(In thousands) |
|||||||
Nine Months Ended September 30, |
|||||||
2018 |
2017 |
||||||
Cash flows from operating activities: |
|||||||
Net income |
$ |
133,405 |
$ |
60,443 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
14,762 |
12,806 |
|||||
Inventory step-up |
— |
1,701 |
|||||
Deferred taxes, net |
30,123 |
32,586 |
|||||
Non-cash share-based compensation |
9,975 |
9,583 |
|||||
(Gain)/loss on disposal of long-lived assets |
(30) |
1,035 |
|||||
Unrealized (gains)/losses on foreign currency hedges |
(1,138) |
1,373 |
|||||
Changes in assets and liabilities |
(66,198) |
(8,742) |
|||||
Net cash provided by operating activities |
120,899 |
110,785 |
|||||
Cash flows from investing activities: |
|||||||
Capital expenditures |
(26,103) |
(16,846) |
|||||
Investments in golf related ventures |
(282) |
(1,499) |
|||||
Acquisitions, net of cash acquired |
— |
(181,824) |
|||||
Proceeds from sales of property and equipment |
43 |
560 |
|||||
Net cash used in investing activities |
(26,342) |
(199,609) |
|||||
Cash flows from financing activities: |
|||||||
(Repayments of) proceeds from credit facilities, net |
(83,455) |
58,652 |
|||||
Repayments of long-term debt |
(1,632) |
— |
|||||
Exercise of stock options |
1,636 |
4,205 |
|||||
Dividends paid, net |
(2,841) |
(2,827) |
|||||
Acquisition of treasury stock |
(22,373) |
(16,479) |
|||||
Distributions to non-controlling interests |
(821) |
(974) |
|||||
Net cash (used in) provided by financing activities |
(109,486) |
42,577 |
|||||
Effect of exchange rate changes on cash and cash equivalents |
76 |
2,293 |
|||||
Net decrease in cash and cash equivalents |
(14,853) |
(43,954) |
|||||
Cash and cash equivalents at beginning of period |
85,674 |
125,975 |
|||||
Cash and cash equivalents at end of period |
$ |
70,821 |
$ |
82,021 |
CALLAWAY GOLF COMPANY |
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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. 2017(1) |
Nine Months Ended September 30, |
Growth |
Non-GAAP Constant Currency vs. 2017(1) |
||||||||||||||||||||||||||
2018 |
2017 |
Dollars |
Percent |
Percent |
2018 |
2017 |
Dollars |
Percent |
Percent |
||||||||||||||||||||||
Net sales: |
|||||||||||||||||||||||||||||||
Woods |
$ |
52,420 |
$ |
65,846 |
$ |
(13,426) |
-20.4% |
-20.0% |
$ |
275,180 |
$ |
262,697 |
$ |
12,483 |
4.8% |
2.9% |
|||||||||||||||
Irons |
65,098 |
60,830 |
4,268 |
7.0% |
7.6% |
271,366 |
202,126 |
69,240 |
34.3% |
32.4% |
|||||||||||||||||||||
Putters |
24,878 |
19,437 |
5,441 |
28.0% |
28.2% |
86,093 |
71,172 |
14,921 |
21.0% |
18.4% |
|||||||||||||||||||||
Golf balls |
44,661 |
39,071 |
5,590 |
14.3% |
14.8% |
165,465 |
136,062 |
29,403 |
21.6% |
20.3% |
|||||||||||||||||||||
Gear/Accessories/Other |
75,597 |
58,420 |
17,177 |
29.4% |
29.9% |
264,052 |
185,022 |
79,030 |
42.7% |
40.9% |
|||||||||||||||||||||
$ |
262,654 |
$ |
243,604 |
$ |
19,050 |
7.8% |
8.3% |
$ |
1,062,156 |
$ |
857,079 |
$ |
205,077 |
23.9% |
22.1% |
||||||||||||||||
(1) Calculated by applying 2017 exchange rates to 2018 reported sales in regions outside the U.S. |
|||||||||||||||||||||||||||||||
Net Sales by Region |
Net Sales by Region |
||||||||||||||||||||||||||||||
Three Months Ended September 30, |
Growth/(Decline) |
Non-GAAP Constant Currency vs. 2017(1) |
Nine Months Ended September 30, |
Growth |
Non-GAAP Constant Currency vs. 2017(1) |
||||||||||||||||||||||||||
2018 |
2017 |
Dollars |
Percent |
Percent |
2018 |
2017(2) |
Dollars |
Percent |
Percent |
||||||||||||||||||||||
Net Sales |
|||||||||||||||||||||||||||||||
United States |
$ |
142,048 |
$ |
123,817 |
$ |
18,231 |
14.7% |
14.7% |
$ |
608,768 |
$ |
470,335 |
$ |
138,433 |
29.4% |
29.4% |
|||||||||||||||
Europe |
33,086 |
32,470 |
616 |
1.9% |
3.1% |
130,613 |
119,999 |
10,614 |
8.8% |
2.4% |
|||||||||||||||||||||
Japan |
54,434 |
53,062 |
1,372 |
2.6% |
3.0% |
183,375 |
147,472 |
35,903 |
24.3% |
21.5% |
|||||||||||||||||||||
Rest of Asia |
20,878 |
20,384 |
494 |
2.4% |
2.0% |
78,712 |
62,952 |
15,760 |
25.0% |
20.6% |
|||||||||||||||||||||
Other foreign countries |
12,208 |
13,871 |
(1,663) |
-12.0% |
-7.6% |
60,688 |
56,321 |
4,367 |
7.8% |
6.4% |
|||||||||||||||||||||
$ |
262,654 |
$ |
243,604 |
$ |
19,050 |
7.8% |
8.3% |
$ |
1,062,156 |
$ |
857,079 |
$ |
205,077 |
23.9% |
22.1% |
||||||||||||||||
(1) Calculated by applying 2017 exchange rates to 2018 reported sales in regions outside the U.S. |
|||||||||||||||||||||||||||||||
(2) Prior period amounts have been reclassified to conform to the current year presentation of regional sales related to OGIO-branded products. |
|||||||||||||||||||||||||||||||
Operating Segment Information |
Operating Segment Information |
||||||||||||||||||||||||||||||
Three Months Ended September 30, |
Growth/(Decline) |
Nine Months Ended September 30, |
Growth |
||||||||||||||||||||||||||||
2018 |
2017 |
Dollars |
Percent |
2018 |
2017 |
Dollars |
Percent |
||||||||||||||||||||||||
Net Sales |
|||||||||||||||||||||||||||||||
Golf Club |
$ |
142,396 |
$ |
146,113 |
$ |
(3,717) |
-2.5% |
$ |
632,639 |
$ |
535,995 |
$ |
96,644 |
18.0% |
|||||||||||||||||
Golf Ball |
44,661 |
39,071 |
5,590 |
14.3% |
165,465 |
136,062 |
29,403 |
21.6% |
|||||||||||||||||||||||
Gear/Accessories/Other |
75,597 |
58,420 |
17,177 |
29.4% |
264,052 |
185,022 |
79,030 |
42.7% |
|||||||||||||||||||||||
$ |
262,654 |
$ |
243,604 |
$ |
19,050 |
7.8% |
$ |
1,062,156 |
$ |
857,079 |
$ |
205,077 |
23.9% |
||||||||||||||||||
Income (loss) before income taxes: |
|||||||||||||||||||||||||||||||
Golf clubs |
$ |
13,587 |
$ |
10,420 |
$ |
3,167 |
30.4% |
$ |
130,925 |
$ |
83,818 |
$ |
47,107 |
56.2% |
|||||||||||||||||
Golf balls |
4,201 |
5,040 |
(839) |
-16.6% |
30,014 |
27,500 |
2,514 |
9.1% |
|||||||||||||||||||||||
Gear/Accessories/Other |
8,482 |
6,420 |
2,062 |
32.1% |
52,888 |
27,916 |
24,972 |
89.5% |
|||||||||||||||||||||||
Reconciling items(1) |
(15,195) |
(17,305) |
2,110 |
-12.2% |
(44,621) |
(48,049) |
3,428 |
7.1% |
|||||||||||||||||||||||
$ |
11,075 |
$ |
4,575 |
$ |
6,500 |
142.1% |
$ |
169,206 |
$ |
91,185 |
$ |
78,021 |
85.6% |
||||||||||||||||||
(1) 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, |
|||||||||||||||||
2018 |
2017 |
||||||||||||||||
As |
As |
Acquisition Costs(1) |
Non- |
||||||||||||||
Net sales |
$ |
262,654 |
$ |
243,604 |
$ |
— |
$ |
243,604 |
|||||||||
Gross profit |
115,239 |
104,902 |
(798) |
105,700 |
|||||||||||||
% of sales |
43.9 |
% |
43.1 |
% |
— |
43.4 |
% |
||||||||||
Operating expenses |
104,540 |
98,865 |
2,579 |
96,286 |
|||||||||||||
Income (loss) from operations |
10,699 |
6,037 |
(3,377) |
9,414 |
|||||||||||||
Other income (expense), net |
376 |
(1,462) |
— |
(1,462) |
|||||||||||||
Income (loss) before income taxes |
11,075 |
4,575 |
(3,377) |
7,952 |
|||||||||||||
Income tax provision (benefit) |
1,335 |
1,486 |
(1,134) |
2,620 |
|||||||||||||
Net income (loss) |
9,740 |
3,089 |
(2,243) |
5,332 |
|||||||||||||
Less: Net income attributable to non-controlling interest |
223 |
29 |
— |
29 |
|||||||||||||
Net income (loss) attributable to Callaway Golf Company |
$ |
9,517 |
$ |
3,060 |
$ |
(2,243) |
$ |
5,303 |
|||||||||
Diluted earnings (loss) per share: |
$ |
0.10 |
$ |
0.03 |
$ |
(0.02) |
$ |
0.05 |
|||||||||
Weighted-average shares outstanding: |
97,320 |
96,879 |
96,879 |
96,879 |
|||||||||||||
(1) Represents non-recurring costs associated with the acquisitions of Ogio International, Inc. in January 2017 and TravisMathew, LLC in August 2017. |
|||||||||||||||||
Nine Months Ended September 30, |
|||||||||||||||||
2018 |
2017 |
||||||||||||||||
As |
As |
Acquisition Costs(1) |
Non- |
||||||||||||||
Net sales |
$ |
1,062,156 |
$ |
857,079 |
$ |
— |
$ |
857,079 |
|||||||||
Gross profit |
508,398 |
400,782 |
(798) |
401,580 |
|||||||||||||
% of sales |
47.9 |
% |
46.8 |
% |
— |
46.9 |
% |
||||||||||
Operating expenses |
337,395 |
301,493 |
8,789 |
292,704 |
|||||||||||||
Income (loss) from operations |
171,003 |
99,289 |
(9,587) |
108,876 |
|||||||||||||
Other expense, net |
(1,797) |
(8,104) |
— |
(8,104) |
|||||||||||||
Income (loss) before income taxes |
169,206 |
91,185 |
(9,587) |
100,772 |
|||||||||||||
Income tax provision (benefit) |
35,801 |
30,742 |
(3,232) |
33,974 |
|||||||||||||
Net income (loss) |
133,405 |
60,443 |
(6,355) |
66,798 |
|||||||||||||
Less: Net income attributable to non-controlling interest |
166 |
251 |
— |
251 |
|||||||||||||
Net income (loss) attributable to Callaway Golf Company |
$ |
133,239 |
$ |
60,192 |
$ |
(6,355) |
$ |
66,547 |
|||||||||
Diluted earnings (loss) per share: |
$ |
1.37 |
$ |
0.62 |
$ |
(0.07) |
$ |
0.69 |
|||||||||
Weighted-average shares outstanding: |
97,076 |
96,343 |
96,343 |
96,343 |
|||||||||||||
(1) Represents non-recurring costs associated with the acquisitions of Ogio International, Inc. in January 2017 and TravisMathew, LLC in August 2017. |
CALLAWAY GOLF COMPANY |
|||||||||||||||||||||||||||||||||||||||
Non-GAAP Reconciliation and Supplemental Financial Information |
|||||||||||||||||||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||||||||||||||
(In thousands) |
|||||||||||||||||||||||||||||||||||||||
2018 Trailing Twelve Month Adjusted EBITDA |
2017 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, |
||||||||||||||||||||||||||||||||
2017 |
2018 |
2018 |
2018 |
Total |
2016 |
2017 |
2017 |
2017 |
Total |
||||||||||||||||||||||||||||||
Net income (loss) |
$ |
(19,386) |
$ |
62,855 |
$ |
60,867 |
$ |
9,517 |
$ |
113,853 |
$ |
123,271 |
$ |
25,689 |
$ |
31,443 |
$ |
3,060 |
$ |
183,463 |
|||||||||||||||||||
Interest expense, net |
2,004 |
1,528 |
1,661 |
1,056 |
6,249 |
348 |
715 |
550 |
642 |
2,255 |
|||||||||||||||||||||||||||||
Income tax provision (benefit) |
(4,354) |
17,219 |
17,247 |
1,335 |
31,447 |
(137,193) |
13,206 |
16,050 |
1,486 |
(106,451) |
|||||||||||||||||||||||||||||
Depreciation and amortization expense |
4,799 |
4,737 |
5,029 |
4,996 |
19,561 |
4,045 |
4,319 |
4,178 |
4,309 |
16,851 |
|||||||||||||||||||||||||||||
EBITDA |
$ |
(16,937) |
$ |
86,339 |
$ |
84,804 |
$ |
16,904 |
$ |
171,110 |
$ |
(9,529) |
$ |
43,929 |
$ |
52,221 |
$ |
9,497 |
$ |
96,118 |
|||||||||||||||||||
Ogio & TravisMathew acquisition costs |
1,677 |
— |
— |
— |
1,677 |
— |
3,956 |
2,254 |
3,377 |
9,587 |
|||||||||||||||||||||||||||||
Adjusted EBITDA |
$ |
(15,260) |
$ |
86,339 |
$ |
84,804 |
$ |
16,904 |
$ |
172,787 |
$ |
(9,529) |
$ |
47,885 |
$ |
54,475 |
$ |
12,874 |
$ |
105,705 |
|||||||||||||||||||
CALLAWAY GOLF COMPANY |
|||||||||||||||
Reconciliation of Non-GAAP Third Quarter and Full Year 2017 Results |
|||||||||||||||
(Unaudited) |
|||||||||||||||
(In thousands) |
|||||||||||||||
Year Ended December 31, 2017 |
|||||||||||||||
Total As |
Acquisition Costs(1) |
Non-Cash Tax |
Non-GAAP |
||||||||||||
Net sales |
$ |
1,048,736 |
$ |
— |
$ |
— |
$ |
1,048,736 |
|||||||
Gross profit |
480,448 |
(2,439) |
— |
482,887 |
|||||||||||
% of sales |
45.8 |
% |
— |
— |
46.0 |
% |
|||||||||
Operating expenses |
401,611 |
8,825 |
— |
392,786 |
|||||||||||
Income (loss) from operations |
78,837 |
(11,264) |
— |
90,101 |
|||||||||||
Other expense, net |
(10,782) |
— |
— |
(10,782) |
|||||||||||
Income (loss) before income taxes |
68,055 |
(11,264) |
— |
79,319 |
|||||||||||
Income tax provision (benefit) |
26,388 |
(4,118) |
3,394 |
27,112 |
|||||||||||
Net income (loss) |
41,667 |
(7,146) |
(3,394) |
52,207 |
|||||||||||
Less: Net income attributable to non-controlling interest |
861 |
— |
— |
861 |
|||||||||||
Net income (loss) attributable to Callaway Golf Company |
$ |
40,806 |
$ |
(7,146) |
$ |
(3,394) |
$ |
51,346 |
|||||||
Diluted earnings (loss) per share: |
$0.42 |
($0.07) |
($0.04) |
$ |
0.53 |
||||||||||
Weighted-average shares outstanding: |
96,577 |
96,577 |
96,577 |
96,577 |
(1) Represents non-recurring costs associated with the acquisitions of Ogio International, Inc. in January 2017, and TravisMathew, LLC in August 2017. |
|||||||||||||||
(2) Represents approximately $7.5 million of non-recurring income tax expense resulting from the 2017 Tax Cuts and Jobs Act, partially offset by a non-recurring benefit of approximately $4.1 million related to the revaluation of taxes on intercompany transactions, resulting from the 2016 release of the valuation allowance against the Company's U.S. deferred tax assets. |
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