Callaway Golf Co. announced its fourth quarter and year-to-date 2013 financial results, clearly demonstrating that its turnaround is well underway.
Led by a more than $55 million (28 percent) increase in driver and fairway woods sales, Callaway's full year results include sales growth as well as significant improvements in gross margins and operating expenses. As a result, Callaway's operating income/loss improved by $105 million to a loss of $11 million compared to a loss of $116 million in 2012, and on a non-GAAP basis was profitable for the first time in several years. Given this significantly improved financial performance, along with the initial trade reception to the Callaway's 2014 product line, the company's annual guidance predicts a return to profitability in 2014 on a GAAP basis.
Callaway achieved these financial results despite a late start to the golf season in the Americas and Europe due to weather, adverse changes in foreign currency rates, and a significantly reduced base business resulting from the 2012 sale of the Top-Flite and Ben Hogan Brands and the transition to a licensing arrangement for apparel and footwear in North America. As compared to 2012, the sale of these brands and licensing arrangements negatively impacted 2013 sales by approximately $57 million for the full year (approximately $4 million for the fourth quarter).
In addition, as compared to 2012, changes in foreign currency rates negatively affected 2013 net sales by approximately $40 million for the full year (approximately $8 million for the fourth quarter).
Unfortunately, these factors mask the strength of the company's improved performance of its current business. For example, compared to 2012, on a constant currency basis, Callaway's current business, which excludes the sold or licensed brands and businesses, actually achieved 14 percent sales growth for the full year of 2013 (17 percent sales growth for the fourth quarter of 2013).
Overall, these results reflect not only the continued success of the Company's turnaround plan but also the increased hard goods market share and brand momentum Callaway experienced in 2013.
Source: Callaway Golf
Led by a more than $55 million (28 percent) increase in driver and fairway woods sales, Callaway's full year results include sales growth as well as significant improvements in gross margins and operating expenses. As a result, Callaway's operating income/loss improved by $105 million to a loss of $11 million compared to a loss of $116 million in 2012, and on a non-GAAP basis was profitable for the first time in several years. Given this significantly improved financial performance, along with the initial trade reception to the Callaway's 2014 product line, the company's annual guidance predicts a return to profitability in 2014 on a GAAP basis.
Callaway achieved these financial results despite a late start to the golf season in the Americas and Europe due to weather, adverse changes in foreign currency rates, and a significantly reduced base business resulting from the 2012 sale of the Top-Flite and Ben Hogan Brands and the transition to a licensing arrangement for apparel and footwear in North America. As compared to 2012, the sale of these brands and licensing arrangements negatively impacted 2013 sales by approximately $57 million for the full year (approximately $4 million for the fourth quarter).
In addition, as compared to 2012, changes in foreign currency rates negatively affected 2013 net sales by approximately $40 million for the full year (approximately $8 million for the fourth quarter).
Unfortunately, these factors mask the strength of the company's improved performance of its current business. For example, compared to 2012, on a constant currency basis, Callaway's current business, which excludes the sold or licensed brands and businesses, actually achieved 14 percent sales growth for the full year of 2013 (17 percent sales growth for the fourth quarter of 2013).
Overall, these results reflect not only the continued success of the Company's turnaround plan but also the increased hard goods market share and brand momentum Callaway experienced in 2013.
Source: Callaway Golf