Callaway Golf Company (ELY) saw its loss widen to $5.87 million, or $0.06 a share for the quarter ended Sep. 30, 2016. In the previous year period, the company reported a loss of $3.62 million, or $0.04 a share. Revenue during the quarter grew 6.87 percent to $187.85 million from $175.78 million in the previous year period. Gross margin for the quarter contracted 216 basis points over the previous year period to 41.99 percent. Operating margin for the quarter stood at negative 2.80 percent as compared to a positive 0.44 percent for the previous year period.
Operating loss for the quarter was $5.26 million, compared with an operating income of $0.77 million in the previous year period.
"We were pleased to see our continued momentum in the marketplace in the third quarter," commented Chip Brewer, president and chief executive officer of Callaway Golf Company. "Despite industry headwinds and softer than expected market conditions, we grew our net sales in the third quarter. We also continued to realize benefits from the comprehensive strategic initiatives we undertook during the last three years, including working capital improvements and the extension of product life cycles, with gross margins improving 110 basis points year to date and cash generated from operating activities increasing over 200% to $86 million for the first nine months of 2016 compared to the same period in 2015."
For financial year 2016, Callaway Golf Company expects revenue to be in the range of $870 million to $880 million. The company projects diluted earnings per share to be in the range of $0.50 to $0.54.
Operating cash flow improves significantly
Callaway Golf Company has generated cash of $85.62 million from operating activities during the nine month period, up 201.59 percent or $57.23 million, when compared with the last year period. Cash flow from investing activities was $12.83 million for the nine month period as against cash outgo of $8.51 million in the last year period. It has incurred net capital expenditure of $12.14 million on net basis during the nine month period, up 42.67 percent or $3.63 million from year ago period.
The company has spent $20.30 million cash to carry out financing activities during the nine month period as against cash outgo of $14.30 million in the last year period.
Cash and cash equivalents stood at $124.63 million as on Sep. 30, 2016, up 199.64 percent or $83.04 million from $41.59 million on Sep. 30, 2015.
Working capital increases
Callaway Golf Company has recorded an increase in the working capital over the last year. It stood at $296.15 million as at Sep. 30, 2016, up 18.63 percent or $46.52 million from $249.63 million on Sep. 30, 2015. Current ratio was at 2.90 as on Sep. 30, 2016, up from 2.60 on Sep. 30, 2015.
Days sales outstanding went down to 93 days for the quarter compared with 98 days for the same period last year.
Days inventory outstanding has decreased to 66 days for the quarter compared with 167 days for the previous year period.
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