Callaway Golf Company announced its first quarter 2014 financial results, including a 22% increase in sales driven by double digit growth in woods (+33%), irons (+29%), and golf balls (+24%).
Additionally, income from operations increased 54% to $62 million and fully diluted earnings per share increased 30% to $0.61, both driven by the increased sales and improvements in gross margins of 160 basis points, which more than offset an increase of $13 million in operating expenses and a $9 million decrease in other income.
The 2014 results benefitted from a $4 million decrease in pre-tax charges related to the cost reduction initiatives that were completed in 2013. The Company was able to achieve these significantly improved financial results despite adverse changes in foreign currency rates, which negatively impacted 2014 sales by $6 million, a $9 million dollar decrease in other income/expense resulting primarily from adverse changes in foreign currency contract values, and a $4 million increase in stock compensation expense as a result of increases in the Company's stock price.
-2014 first quarter sales increased 22% to $352 million, compared to $288 million in 2013.
- 2014 first quarter income from operations increased 54% to $62 million, compared to $40 million in 2013.
- 2014 first quarter earnings per share increased 30% to $0.61, compared to $0.47 in 2013.
- Callaway reiterates full year 2014 earnings guidance, estimating sales of $880 million to $900 million and fully diluted earnings per share of $0.12 to $0.16.
The Company's net sales for the first quarter of 2014 increased to $352 million or up 22%, as compared to $288 million for the same period in 2013. The strength of the Company's 2014 product line more than offset the negative impact of foreign currency movements. As compared to 2013, the Company's first quarter 2014 net sales were negatively impacted by $6 million due to adverse changes in foreign currency exchange rates.
In addition to the increase in sales, gross margins improved 160 basis points compared to last year due to improved pricing and sales mix, the completion of the cost-reduction initiatives in 2013, and productivity improvements resulting from several initiatives implemented last year, all of which more than offset the negative impact of foreign currency exchange rates and increased product costs associated with additional technology in several new products.