Callaway Golf Company 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%) increase in driver and fairway woods sales, the Company's full year results include sales growth as well as significant improvements in gross margins and operating expenses.As a result, the Company'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.
Highlights:
-2013 full year net sales of the Company's current business, on a constant currency basis, increased 14%. On a GAAP basis, net sales increased 1% for the full year.
- 2013 non-GAAP operating income/loss improved by $74 million to $5 million of income in 2013, compared to a non-GAAP operating loss of $69 million in 2012. On a GAAP basis, 2013 operating loss improved by $105 million to a loss of $11 million compared to a loss of $116 million in 2012.
- 2013 full year non-GAAP loss per share of ($0.02) compared to a non-GAAP loss per share of ($0.77) in 2012. On a GAAP basis, 2013 full year loss per share of ($0.31), compared to a loss per share of ($1.96) in 2012.
The Company 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, the Company's current business, which excludes the sold or licensed brands and businesses, actually achieved 14% sales growth for the full year of 2013 (17% 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 the Company experienced in 2013.
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