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Home Daily Golf Briefs Daily Pulse for August 4, 2017

 

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Web Street Golf Daily Pulse
VOLUME 7, NUMBER 152                                                       
Friday, August 4, 2017

ANY IDEA WHO SAID THIS? “I hit one of the best shots I've ever hit in my life today, my second shot on No. 8. Michael came over and he's like, ‘Where are you looking here?’ I said, ‘Michael, just put the bag over there, stand over there and watch this.’ And afterwards he said, ‘I really wanted to use one of my vetoes,’ but he goes, ‘The timing of it, the first round after we win a major, there was no use in me using a veto there.’ It was a really cool shot. I was shocked I pulled it off after, and normally when I see it, I kind of expect myself to do it.”

BRAIN TEASER: Major champions Jack Nicklaus, Tiger Woods, Greg Norman, Adam Scott, Rory McIlroy, Dustin Johnson, Raymond Floyd, Arnold Palmer and Ken Venturi have all recorded victories at Firestone Country Club. Since 1994, only two players have been victorious at Firestone Country Club's South Course who haven't won a major championship yet. Can you name them?

HOW'S BIZ? Callaway Golf reported second quarter sales of $305 million, an increase of $59 million (24%) from a year ago. The increase was fueled by stronger metal wood sales, up $34.7 million along with another $25.4 million improvement in the gear and accessories category for the quarter. Callaway reported net income of $31.5 million, slightly less than a year ago when it recorded $34.1 million for the quarter, which included a one-time gain of $18 million from a partial sale of its position in Topgolf.

Six-month sales are $613.5 million, up from $519.7 million in 2016. Callaway’s net income through the first half of 2017 is $57.4 million versus $72.5 million in 2016. Metal wood sales for six months are $196.9 million, up $53 million from 2016. Iron sales are $141.3 million, down $18.8 million, while putters sales are $51.7 million, down $3.9 million. Golf ball sales are $97 million, up $8.6 million from a year ago and gear/accessories came in at $126.6 million, up $54.9 million or 77%.

U.S. sales for six months are $348.3 million, up 21.2% from a year ago, while European revenues are up 15.1% ($86 million), Japan was up 18.2% ($94.4 million) and the rest of Asia 18.5% ($42.2 million). Year-to-date, overall sales for the company are up 18.1% or $93.9 million with the United States delivering $61 million of the gains. The revenue growth can be measured from two specific categories. Metal woods have increased by $53 million from a year ago, while gear and accessories have contributed $54.9 million in gains.

Callaway currently estimates full year 2017 net sales of $980 - $995 million range. This implies the equipment manufacturer will see 2017 sales in the back half of the year between $367 to $382 million. In 2016, Callaway’s second half sales were $351 million and in 2015 it was $329 million. However, in 2017, Callaway has acquired OGIO and assuming it closes on TravisMathew (more to follow) both businesses will contribute to the top line before the end of the year. Its unknown to what extent each will provide incremental improvement to the top line sales figures, which leaves some question whether Callaway’s core business will slow down or maintain its strong pace.

GROWTH BY ACQUISITION? Back in early January Callaway Golf announced it was buying OGIO International, Inc., a designer of bags, accessories and apparel for the golf, lifestyle, motorsports and endurance categories for $75.5 million. Six months later the company is buying TravisMathew for $125.5 million. "We are very excited about this acquisition," stated Chip Brewer, President and Chief Executive Officer of Callaway Golf Company. "With its golf heritage, culture of product excellence and double-digit growth in the golf and lifestyle apparel business, TravisMathew is a great fit with our business, brands, culture and our strategy to grow in areas tangential to golf. This acquisition, once completed, is expected to be slightly accretive to earnings in 2018 and create significant value for our shareholders over the long-term. We look forward to working with the TravisMathew management team to maximize this brand's growth potential."  

In 2017, TravisMathew's net sales are expected to be in the range of $55-60 million, of which approximately $10-15 million will contribute to Callaway's 2017 second half financial results assuming the transaction closes in the third quarter of 2017. The purchase price values TravisMathew at a multiple of approximately 11.8 times projected 2017 full year adjusted EBITDA.

A NEW WORLD: The PGA of America has partnered with Hong Kong-based i3 Sports to create a dedicated digital footprint in Greater China via social media and Web channels. Under the multi-year licensing agreement, i3 Sports will create and implement a digital media strategy that localizes the PGA’s library of content and distributes it via wide-reaching platforms, including a dedicated microsite on Sina Sports website.

“The opportunity to showcase the unparalleled expertise of PGA Professionals, as well as deliver engaging PGA.com content through i3 Sports in Greater China is a tremendous growth-of-the-game opportunity,” said PGA of America CEO Pete Bevacqua. “This partnership will enable us to expand the PGA of America’s global outreach in this emerging market through highly popular Web and social media outlets.”
  
“The team at i3 Sports is excited to work on delivering PGA of America content throughout Greater China,” said Raymond Roessel, Founder and Managing Director of i3 Sports, and a PGA of America Professional since 1998. “The content will include industry-leading instruction, profiles of PGA of America Professionals working in Greater China and news from the PGA of America, which operates major championship events, including the PGA Championship, Ryder Cup, KPMG Women’s PGA Championship and KitchenAid Senior PGA Championship.”

“Sina Sports has worked on successful partnerships with i3 Sports in the past, and we’re delighted to now offer exclusive PGA of America content via Weibo and a dedicated microsite,” said Sam Lee, Sina Sports’ Head of Content Acquisition and Strategic Partnerships. “Our golf and sports fans are always looking for top-quality videos and stories, so we’re looking forward to promoting a wide variety of content from such a world-renowned organization, dedicated to the growth and enjoyment of the game of golf.”

SIN CITY HERE WE COME: PGA TOUR Superstore has signed a lease for its first retail location in Las Vegas, a 30,000 square foot space situated in downtown Summerlin. The Las Vegas location marks the company’s 31st store and is expected to open later this year and bring approximately 40 new jobs to the area.

“Las Vegas and Summerlin in particular represent a premier market for our expansion. As a truly thriving area for golf, this is an ideal place to introduce what we believe is the best experience in golf retail,” said PGA TOUR Superstore President and CEO Dick Sullivan. “As we continue to grow, opening up stores in new markets allows us to inspire a brand new group of golfers.”

WEB GEMS:

FAKE NEWS! President Trump criticized Golf magazine on Twitter evening, adding the infamous liberal propaganda outlet to the ranks of Vanity Fair, Time, People, and National Review among magazines who have drawn public scorn from the commander-in-chief’s social media accounts in recent months. Unfortunately for newly appointed editor-in-chief David DeNunzio and his team, the President didn’t directly name-check them when he charged their reporting as “Fake News” and “TOTALLY UNTRUE.” Trump was, of course, disputing part of a 7,000-word story by senior writer Alan Shipnuck posted Tuesday on Golf.com and appearing in this week’s Sports Illustrated — specifically, one quote: “That White House is a real dump.” READ MORE>>>

FRESH START: Rory McIlroy shrugged off a closing three-putt bogey and declared his opening 67 in the WGC-Bridgestone Invitational with new bagman Harry Diamond as the start of a new chapter in his career. “There were a couple of times where I probably should have hit another club, but that’s on me, that’s not on anyone else,” McIlroy said. "So I'd much rather be frustrated at my own decision than someone else's." READ MORE>>>

THAT’S ENTERTAINMENT: Stephen Curry pumped his right fist, raised his arms in the air with club in hand and gave a firm shoulder bump to caddie Jonnie West, his golf partner on road trips with the Golden State Warriors. A birdie at last after he scored three bogeys over his initial five holes Thursday. READ MORE>>>

ANSWERS: “I hit one of the best shots I've ever hit in my life today, my second shot on No. 8. Michael came over and he's like, ‘Where are you looking here?’ I said, ‘Michael, just put the bag over there, stand over there and watch this.’ And afterwards he said, ‘I really wanted to use one of my vetoes,’ but he goes, ‘The timing of it, the first round after we win a major, there was no use in me using a veto there.’ It was a really cool shot. I was shocked I pulled it off after, and normally when I see it, I kind of expect myself to do it.” --Open Champ, Jordan Spieth.

Major champions Jack Nicklaus, Tiger Woods, Greg Norman, Adam Scott, Rory McIlroy, Dustin Johnson, Raymond Floyd, Arnold Palmer and Ken Venturi have all recorded victories at Firestone Country Club. Since 1994, the two players that have been victorious at Firestone Country Club's South Course but not yet won a major championship are Shane Lowry and Hunter Mahan.

THE INFORMATION CONTAINED IS BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED. THE OPINION EXPRESSED IS THAT OF TERRY MCANDREW AND SHOULD NOT BE CONSIDERED A SOLICITATION TO BUY OR SELL SECURITIES IN ANY OF THE COMPANIES DISCUSSED WITHIN THIS NEWSLETTER. CONTENTS OF THIS NEWSLETTER MAY NOT BE REPRINTED OR REBROADCAST WITHOUT THE EXPRESSED WRITTEN CONSENT OF TMAC GOLF