Callaway Golf Company Reports Operating Results (10-Q)
Callaway Golf Company has a market cap of $423.2 million; its shares were traded at around $6.7 with and P/S ratio of 0.5. The dividend yield of Callaway Golf Company stocks is 0.6%.ELY is in the portfolios of Diamond Hill Capital of Diamond Hill Capital Management Inc, Kenneth Fisher of Fisher Asset Management, LLC, Chuck Royce of Royce& Associates, Paul Tudor Jones of The Tudor Group, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC.
Highlight of Business Operations: The Companys net loss for the third quarter of 2010 increased to $18.3 million from $13.4 million in the third quarter of 2009. The Companys diluted loss per share increased to a loss of $0.33 per share for the third quarter of 2010 compared to a loss of $0.25 per share for the same period in 2009. The primary reasons for the
The Companys net income increased by $13.2 million to $13.5 million for the first nine months of 2010 compared to $0.3 million in 2009. The Companys 2009 preferred stock offering adversely affected the Companys first nine months earnings per share by approximately $0.12 per share in 2010 as compared to $0.05 per share in 2009 because the offering was completed on June 15, 2009. Despite the effect of the preferred stock offering, the Companys fully diluted earnings per share increased $0.13 to $0.09 per share for the first nine months of 2010 compared to a loss per share of $0.04 for the same period in 2009. The primary reasons for the nine month increase in earnings were the increase in net sales and gross margins discussed above, which were partially offset by an increase in operating expenses.
Net sales in the United States decreased $17.7 million to $76.2 million during the third quarter of 2010 compared to the same period in the prior year. The Companys sales in regions outside of the United States increased $2.4 million (3%) to $99.4 million during the third quarter of 2010 compared to the same quarter in 2009. The Companys reported net sales in regions outside the United States in the third quarter of 2010 were favorably affected by the translation of sales in foreign currencies into U.S. dollars based upon 2010 exchange rates. If 2009 exchange rates were applied to 2010 reported sales in regions outside the United States and all other factors were held constant, net sales in such regions would have been $3.3 million less than reported in the third quarter of 2010.
$2.6 million on preferred stock (as defined in Sources of Liquidity below) as a result of the preferred stock offering that was completed late in the second quarter of 2009. Diluted losses per share increased to $0.33 per share on 64.0 million weighted average shares outstanding in the third quarter of 2010 compared to losses of $0.25 per share on 63.2 million weighted average shares outstanding in the third quarter of 2009. Diluted losses per share for the third quarter of 2010 and 2009 were negatively affected by $0.05 and $0.01 per share, respectively, related to after-tax costs incurred in connection with the Companys Global Operations Strategy Initiatives.
The Company has continued to actively implement its Global Operations Strategy Initiatives. As a result of these initiatives, the Companys golf clubs and golf balls operating segments absorbed pretax charges of $4.7 million and $0.6 million, respectively, during the third quarter of 2010. During the third quarter of 2009, the Companys golf clubs and golf balls operating segments absorbed pretax charges of $0.7 million and $0.2 million, respectively, relating to these initiatives.
Net sales for the nine months ended September 30, 2010 increased by $17.2 million (2%) to $782.1 million compared to $764.9 million in the same period in 2009. Global economic conditions continued to be challenging during the current year and the golf industry overall did not recover in 2010 as management had anticipated at the beginning of the year. Although the unfavorable economic and industry conditions significantly affected sales volumes for the first nine months of 2010, favorable foreign currency rates and an overall increase in average selling prices, as a result of less promotional activity, were able to offset the volume decline. This increase in net sales consists of a $19.5 million increase in net sales of the Companys golf clubs segment partially offset by a $2.3 million decrease in net sales of the Companys golf balls segment as presented below (dollars in millions):
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