Callaway Golf Co., as expected, narrowed its quarterly net loss, but declined to give a fiscal 2009 outlook, given the uncertainty over consumer spending and foreign currency rates. Callaway said it expected that fluctuations in foreign currency would have a “significant adverse impact” on its international results in 2009.
Its fourth quarter loss was cut to $3.2 million, or 5 cents per share, compared with a a loss of $16.2 million, or 25 cents per share, a year earlier. Revenue fell 2% to $171.3 million, said the Carlsbad, California-based company.
The latest quarter included a pretax gain of $19.9 milion from a change in energy derivative valuation account. Excluding this charge, the loss from operations was $28.6 million, about even with a loss of $28.7 million a year ago.
For the year, the golf clubs manufacturer earned $66.2 million, or $1.04 a share, up from $54.6 million, or 81 cents, a year ago. Revenues eased to $1.117 billion from $1.124 billion.
Callaway noted that gross profit for the full year was $486.8 million for 2008 (or 44% of net sales) compared to $493.2 million (or 44% of net sales) in 2007. Excluding the impact of the gross margin improvement charges, pro forma gross profit percentages for both 2008 and 2007 would have been 45%.
Operating expenses for 2008 were $402.6 million (or 36% of net sales) compared to $403.0 million (or 36% of net sales) in 2007.
The company said fully-diluted pro-forma earnings per share was 94 cents a share (on 63.8 million shares outstanding), representing an increase of approximately 6% compared to 89 cents (on 67.5 million shares outstanding) in 2007. Fully diluted pro forma earnings per share for 2008 exclude a non-cash, non-operational benefit of 22 cents per share related to the reversal of an energy derivative valuation account established in 2001 in connection with the companyï¿½s termination of a longï¿½term energy supply contract. Pro-forma earnings also exclude for 2008 and 2007 charges related to the companyï¿½s gross margin initiatives in the amount of 12 cents and 8 cents per share, respectively. Including these benefits and charges, reported earnings per share for 2008 were $1.04 compared to $.81 in 2007.
ï¿½We are very pleased that we were able to deliver a 6% increase in pro forma earnings per share in a very difficult economic environment,ï¿½ commented George Fellows, president and CEO. ï¿½The many initiatives we implemented over the last three years allowed us to react quickly to the rapid decline in economic conditions and grow our earnings per share despite the challenges presented.ï¿½
ï¿½Looking forward,ï¿½ continued Fellows, ï¿½we expect more challenges as a result of continued unfavorable global economic conditions. In addition, given the recent overall strengthening of the US dollar, we anticipate that foreign currency exchange rates will have a significant adverse impact upon the translation of our international results in 2009 and therefore on our consolidated results. Because it is too difficult to predict what consumer spending or foreign currency rates will be in this environment, we are not providing specific financial guidance for 2009 at this time.ï¿½
ï¿½Despite these macroeconomic challenges, our fundamental business operations remain strong and are executing well,ï¿½ added Fellows. ï¿½Callaway Golf is in an enviable position compared to many other companies given the strength of our brands, our improved supply chain, and our strong balance sheet. In addition, our strong 2009 product line-up will give us an advantage when the retail market begins to improve. We will continue to carefully manage our costs and inventories, but also intend to continue to invest in initiatives that will drive longer term growth so that we are fully prepared to take advantage of opportunities when the global economy begins to recover.ï¿½