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Home Daily Golf Briefs Daily Pulse for April 27, 2018

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Web Street Golf Daily Pulse
VOLUME 8, NUMBER 83                                                         
Friday, April 27, 2018

ANY IDEA WHO SAID THIS? “Golf is more than a game to me because it has been my life and my education. It has shown me the world and inspired me to better and challenge myself and introduced me to people from all walks of life. I chose well when I chose golf.”

BRAIN TEASER: All stats this week at the Zurich Classic are unofficial due to the format. However, Rob Oppenheim made a double eagle at the par-5 seventh. Can you name the last player to make a double eagle on the PGA TOUR? HINT: It happened last year!

JUST ANOTHER YEAR? The first signs of how the equipment business is faring surfaced with Callaway Golf reporting its 2018 first quarter operating results. A year ago, the company got off to a strong start as 2017 first quarter sales were $309 million (an increase of $35 million from 2016) and net income was $25.88 million. It gave the company a running start. Callaway isn’t showing any signs of slowing down, in fact quite the opposite in 2018. First quarter sales increased $94 million (31%) to $403 million and net income was $63 million! These numbers represent records for the business!! Two short years ago, first quarter sales were $274 million and now stand at $403 million. Meanwhile, no one is lobbying it is or has been, a hot equipment during this period!

Callaway reported net sales increased in all operating segments, in all regions and across all major product categories. Metal wood sales were $128.8 million for the quarter, an increase of $21.3 million (19.7%) from a year ago. Callaway said it is the #1 club brand in the U.S. for 26 consecutive months, including holding the #1 iron brand position for 38 consecutive months. Iron sales were $95.2 million, up $36.2 million (61.3%); putter sales were $33.4 million, up $6.4 million (23.8%), while golf ball sales were $54.9 million, an improvement of $6.7 million (13.9%). The category of gear, accessories and other reported sales of $90.8 million, up $23.7 million (30.5%) in the reporting period.

Looking at geographies, the US. market reported an increase of 31.9%, while Japan was higher by 49% and Europe came in up 14.8%. The Rest of Asia improved by 35%. Callaway said its Japanese hard goods market share in the first quarter was 16.8%, down 480 basis points year-over-year. However, March hard goods share increased to 18.4%, up 170 basis points versus February and it is anticipating further improvement in April. In Europe, the company’s hard goods market share was 24%, down 200 basis points year-over-year, but it remains #1 in total hard goods. It reported the market spend was down 7% and rounds played were down 22% in Q1 driven primarily by poor weather conditions.

As a result of this better than expected first quarter, Callaway has increased its full year sales guidance to $1,170 million - $1,185 million as compared to its prior guidance of $1,115 million - $1,135 million. It also increased its full year 2018 GAAP earnings per share guidance to $0.77 - $0.82 compared to prior guidance of $0.64 - $0.70.

"It has been a strong start to 2018," commented Chip Brewer, President and Chief Executive Officer of Callaway Golf Company. "Sales across our entire product line, including the Rogue line of woods and irons as well as the new Chrome Soft golf balls, are off to a strong start and we also benefitted from improved foreign exchange rates and market conditions. As a result, our EBITDA increased 95% during the first quarter.  Business around the globe remains strong with all major regions reporting significant sales growth and our new businesses are performing at or above plan.  While I am mindful that the first quarter generally represents the initial sell-in for the new golf season, I am pleased overall with how our business is performing and am cautiously optimistic for the balance of the year."

Callaway reported its hard goods market share was 26.2%, essentially flat year over-year. But it said the hard goods spend increased 9.5% in the first quarter and 20.7% in March alone! Market growth was driven, it said, by club sales; while balls were down slightly most likely driven by weather. Callaway said its field inventories are currently healthy.

NOT FOR THE WEAK MINDED: The U.S. Open is known for being the hardest test in golf. Some may argue otherwise, but its never, ever been considered a walk in the park. Its is therefore interesting to learn the United States Golf Association (USGA) has accepted a total of 9,049 entries for the 2018 U.S. Open Championship at Shinnecock Hills Golf Club in Southampton, N.Y.

The number of entries is the eighth-highest behind the record of 10,127 accepted for the 2014 U.S. Open at Pinehurst Resort & Country Club’s Course No. 2. It is the seventh consecutive year the national championship has received more than 9,000 entries.

“The continued worldwide interest in competing in the U.S. Open Championship, golf’s ultimate test, remains significant,” said Stuart Francis, USGA Championship Committee chairman. “We look forward to conducting local and sectional qualifying and to hosting the U.S. Open at Shinnecock Hills Golf Club, one of the five founding members of the USGA, for the fifth time.”

WEB GEMS:

BACK TO WORK: Tiger Woods is expected to return to competition at next week's Wells Fargo Championship, according to multiple Golf Channel sources. READ MORE>>>

PLAY AWAY! Former world No 1 Jason Day and partner Ryan Ruffels showing their Aussie roots with Down Under by Men at Work, Shane Lowry and Padraig Harrington opting for Beautiful Day by fellow Irishmen U2, and Martin Laird and Russell Knox showing their national pride with a bagpipe-only rendition of Flower of Scotland. Cody Gribble and John Peterson's choice of Careless Whisper by George Michael might seem an odd choice to gee them up for the round, but Reed plays up to his cold-eyed reputation with Eye of the Tiger. Rose, meanwhile, takes a sly dig at his partner and good pal Stenson with Spandau Ballet's Gold - the Englishman beat the Swede to the gold medal in a shootout at the Rio Olympics in 2016. READ MORE>>>

ANSWERS: “Golf is more than a game to me because it has been my life and my education. It has shown me the world and inspired me to better and challenge myself and introduced me to people from all walks of life. I chose well when I chose golf.”--Sir Nick Faldo.

In the second round of the 2017 Wyndham Championship, Johnson Wagner had an albatross on the par-5 fifth hole with a 5-iron from 214 yards. It is the second of his career, performing the feat on the seventh hole in round one of the 2010 Sanderson Farms Championship.

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