Callaway Golf Reports First Quarter Sales and Earnings
CARLSBAD, Calif., April 28 /PRNewswire/ -- Callaway Golf Company (NYSE: ELY - news) today reported net sales of $185.7 million for the first quarter ended March 31, 1999, an increase of five percent over net sales of $176.9 million reported in the first quarter of 1998, according to Ely Callaway, Founder, Chairman and Chief Executive Officer. Net income increased 15 percent to $12.8 million in the first quarter of 1999 from the first quarter of 1998, and diluted earnings per share increased to $0.18 in 1999 from $0.16 in the first quarter of 1998.
Net sales of $185.7 million were comprised of: $81.6 million of Great Big Bertha® Hawk Eye® and other titanium metal woods; $39.5 million of Big Bertha® Steelhead(TM) and other stainless steel metal woods; $48.1 million of Big Bertha® X-12(TM) and other irons; $10.8 million in Odyssey® product sales; and $5.7 million of other sales.
Mr. Callaway commented, ''We previously established our sales forecasts for 1999 in light of uncertainties in both the U.S. and international markets, and see no reason to revise that cautious sales outlook for the year despite the excellent first quarter. We are implementing strategies this year that are aimed more at improving profitability than at increasing sales volume per se. The Company's profits and earnings in the first quarter reflect some of the expected benefits of the changes we made to our business starting in late 1998, and were in line with our expectations. Excluding expenses related to golf ball operations, the operating margin for the first quarter of 1999 was 15.8% as compared with 12.8% in 1998's first quarter. In short, the first quarter results confirm, in my opinion, that we have begun 1999 on track with our plan.''
The 15 percent increase in net income was primarily attributable to lower operating costs during the first quarter of 1999 as compared to the first quarter of 1998. Reductions in selling and research and development costs were largely attributed to the Company's 1998 restructuring, including the consolidation and/or elimination of certain operations. Higher general and administrative costs relate to the ramp-up of golf ball operations, along with increases associated with certain of the Company's foreign subsidiaries. The Company's lower gross margin related primarily to golf clubs sold during the first quarter, but which were manufactured in the fourth quarter of 1998 at higher labor and overhead rates, costs associated with consolidating manufacturing operations, and the ongoing sale and disposal of non-current product, partially offset by a favorable shift in product and regional sales mix.
According to Mr. Callaway, ''The golf club market in general is still a bit weak in the U.S. and internationally, but management feels good and encouraged by our sales and productivity -- and by our profitability -- in the first quarter. Our first quarter revenues for Hawk Eye® and Steelhead(TM) Metal Woods alone were $110 million. These excellent sales numbers on our two newest products were in part the result of our planning, started months ago, to have sufficient production and inventory at the time of launch to make substantial early shipments of the full complement of these new drivers and fairway woods. In addition to these strong sales of our metal woods, we also sold and delivered $45 million worth of Big Bertha® X-12(TM) Irons and had encouraging results with our Odyssey putter line. Overall, we believe that we remained strongly in the #1 position in dollar sales of premium woods, irons and putters in the U.S. and worldwide.''
''We have also seen some reliable early season reports on sales of golf clubs at retail in the United States'' Mr. Callaway continued. ''These reports tell us that our metal woods, irons and putters are the top selling products at retail -- even though they are, by a considerable degree, among the highest priced. This demonstrates, in my opinion, the unique appeal of our golf clubs to amateur golfers. It also reflects, in my opinion, the unique power of our brand and our company.''
Callaway Golf Staff Professionals Jesper Parnevik, Bruce Fleisher and Rachel Hetherington swept the PGA, Senior PGA and LPGA tournament events held last weekend. All used Callaway® titanium drivers, Callaway® fairway woods, and Big Bertha® X-12(TM) irons. Callaway® drivers, fairway woods and irons, as well as Odyssey® putters, are No. 1 in usage by professionals on the five major professional tours, combined. In all tournaments played on the five major professional tours around the world combined for all of 1999 through April 25, 41.1% of the drivers used were Callaway® drivers, 51.7% of the fairway woods used were Callaway® fairway woods, 18.4% of the irons used were Callaway® irons, and 26.4% of the putters used were Odyssey® putters (Source: Darrell Survey Company, Sports Marketing Survey, Ltd.).
In accordance with the Company's dividend practice for 1999, which was adopted by the Board of Directors at its February 1999 meeting, the dividend for the first quarter will be determined by the Board of Directors at its meeting in early May, 1999, payable in early June.
Callaway Golf makes and sells Big Bertha® metal woods and irons, including Great Big Bertha® Hawk Eye® Titanium Metal Woods, Big Bertha® Steelhead(TM) Stainless Steel Metal Woods, Big Bertha® X-12(TM) Irons and Odyssey® Putters and Wedges with Stronomic® and Lyconite(TM) Inserts.
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