Callaway Golf Company recorded an 11% increase in net sales for the first quarter to $334.6 million from $302.4 million for the same period in 2006.
Fully diluted earnings per share were 48 cents on 68.3 million shares as compared to 33 cents on 70.1 million shares in 2006. This represents a 45% increase in diluted earnings per share.
Fully diluted earnings per share for the first quarter of 2007 include a penny of after-tax charges for gross margin improvement initiatives announced in November, 2006. Also, the first quarter of 2006 includes a peny of after-tax charges for the integration of Top-Flite operations. Excluding these charges, the company's pro forma fully diluted earnings per share for the first quarter of 2007 would have increased 44% to 49 cents, as compared to pro forma fully diluted earnings per share of 34 cents for the first quarter of 2006.
“We are pleased with our results for the first quarter and the initial consumer acceptance of our new products this year,” commented George Fellows, president and CEO. “Our efforts to improve our product development process and supply chain along with gross margin improvement initiatives are beginning to deliver positive operating results.”
“While cautiously optimistic given our first quarter results,” continued Mr. Fellows, “it is important to remember that it is very early in the year. In fact, the second quarter is the real start of the golf season in many regions, and when consumer purchases hit their peak. Accordingly, our focus is to support our retailers during the peak season and deliver products to them and our consumers as quickly as possible. Having said this, we are raising our full year estimates to reflect the positive results of the first quarter, balanced with the fact that a majority of the year still remains.”
Business Outlook
The company estimates that its full year 2007 net sales will be in the range of $1.05 to $1.07 billion compared to the previous estimate of $1.04 to $1.06 billion and that its 2007 full year pro forma fully diluted earnings per share will be in the range of 72 cents to 82 cents on an estimated 70 million shares compared to 66 cents to 76 cents on 68 million shares. Pro forma earnings exclude charges related to the company's gross margin improvement initiatives, currently estimated at 8 cents per share for 2007, but include charges related to employee equity-based compensation under FAS 123R.
Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Quarter Ended
March 31,
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2007 2006
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Net sales $334,607 100% $302,445 100%
Cost of sales 173,886 52% 170,933 57%
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Gross profit 160,721 48% 131,512 43%
Operating expenses:
Selling 75,291 23% 68,128 23%
General and administrative 21,558 6% 20,224 7%
Research and development 8,016 2% 6,804 2%
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Total operating expenses 104,865 31% 95,156 31%
Income from operations 55,856 17% 36,356 12%
Other income (expense), net (1,338) 302
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Income before income taxes 54,518 16% 36,658 12%
Income tax provision 21,682 13,797
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Net income $32,836 10% $22,861 8%
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Earnings per common share:
Basic $0.49 $0.33
Diluted $0.48 $0.33
Weighted-average shares outstanding:
Basic 67,272 69,166
Diluted 68,318 70,143
