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Callaway Golf (ELY:NYSE) reported its first quarter operating results. The only pure play public golf company increased sales by $3 million from a year ago as it reported $288 million versus $285 million in 2012. Since a year ago, Callaway has striped some of its operating units (Top-Flite and Ben Hogan brands for example) away in an effort to focus on its core business. In addition to the increase in sales, improvements in gross margins and operating expenses, Callaway subsequently delivered a stronger bottom line to its shareholders. The company reported net income of $29 million compared to $15 million  in the first quarter of 2012.

Sales in the US ($159.8 million) were up 7% compared to a year ago, while Europe ($38.3 million) was a drag on the business falling 10%. Looking at the product categories, metal woods ($99.5 million) were up 10%, while irons ($57.5 million) slipped 1% compared to a year ago. Putter sales ($32.55 million) grew by 35% in the quarter compared to a year ago, while golf ball sales ($43 million) were up 1%. The category of “accessories and others” ($55.2 million) slumped 20% versus a year ago.

"I am very pleased with our overall results this quarter," commented Chip Brewer, President and Chief Executive Officer. "The strength of our 2013 product line, including our new X Hot products and Versa line of putters, allowed us to achieve a 12% increase in net sales on our current business on a constant currency basis. In addition, we are beginning to see the results of the many cost-reduction and other initiatives we took in 2012, which contributed to improvements in gross margins and operating expenses, and all of which culminated in a $23 million increase in non-GAAP operating income for the first quarter of 2013. However, it is still early in the year, and the second quarter always has a big impact on our ability to achieve our full year financial targets. With that said, the first quarter was an important first step in our multi-year turnaround plan and we are pleased to report our turnaround is on track."  

The company is lowering its 2013 sales guidance to Wall Street due to adverse foreign exchange rates, which could hamper sales outside the US. "We are lowering our full year 2013 net sales guidance, primarily due to our expectations that the unfavorable foreign currency headwinds experienced during the first quarter of 2013 will continue for the balance of the year," explained Brad Holiday, Chief Financial Officer.  "We believe, however, that gains on our foreign currency hedging contracts, along with better operating efficiencies, will enable us to mitigate the anticipated adverse foreign currency conditions and maintain our full year earnings guidance at this time."

Callaway is estimating 2013 net sales to be $830 million, compared to previous guidance of $850 million. Net sales for 2012 were $834 million, which included $60 million related to the brands and products that in 2012 were sold or transitioned to a third party model. Excluding sales from the sold or transitioned businesses, Callaway estimates that net sales from its current business on a constant currency basis will increase by approximately 12% in 2013 compared to 2012.