Callaway Golf Co. (NYSE:ELY) Q4 2014 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 05:00 pm ET

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Callaway Golf Co. (NYSE:ELY) Q4 2014 Earnings Conference Call - Final Transcript

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Executive
Oliver Brewer

profitability on a $6 million increase in revenues.

In marketing we are further enhancing our core competency in digital marketing and content creation.

Executive
Oliver Brewer

If you visited our booth at the PGA show or tracked the show online. You couldn't help but notice the constant stream of activity and energy partly driven by internally developed content that is being distributed to consumers through multiple digital platforms. We believe we are leading in modern marketing methods in the golf industry.

We also are continuing to work hard on our culture of cost improvements to help fund these investments. During the year we made many tough decisions on structure which further streamlined our cost base. A prime example here is our decision to transition our subsidiaries in Thailand and Malaysia to distributors, a more profitable long term sustainable model for servicing these markets.

Turning to the product front, we enter 2015 excited about an extensive new line up of ball, accessory, and clubs. On the club side, this includes Big Bertha which his firmly planted as our flagship brand. These products feature cutting edge technology often leveraging our advantage in multi material construction. It also includes the soon to be launched XR family of clubs, a bold new approach to a classic line that launches in late February.

One of the key new innovations that we're delivering for 2015 is the 360 degree cup facing irons. This technology drives the performance in our Big Bertha as well as our XR line of irons. It delivers incredible ball speeds and is a potential game changer in this category just like it has been in the Fairway Wood category where we now have the number one selling model both in the US and in Japan. In support of the strength of our club line up, Calloway received 18 gold medals in the most recent Golf Digest Hot List, more than any other manufacturer by a wide margin.

Now, looking at the golf ball business. We have what we believe is a unique opportunity that is ripe with potential, a new premium ball line Chrome Soft, featuring a soft fast core that is both low compression and high performance. Unmatched feel with tour control and outstanding distance. Over the last two years our ball business has moved from a drag on earnings to a nice contributor. However, we have not significantly grown this business either in actual dollar volume or market share. If we are successful in developing a sustainable growth position here, it would be a very positive development for our business. Our team is energized about this opportunity and we view it as a key initiative.

Trade reactions to our 2015 lines has been very positive. We have been pleased with the sell through of the Big Bertha and the Big Bertha Beta irons which were both launched in Q4 in the US and Japan respectively. Looking forward, we're optimistic regarding the XR line and the Chrome Soft golf balls.

Executive
Oliver Brewer

The Chrome Soft golf