TOPGOLF CALLAWAY BRANDS ANNOUNCES FOURTH QUARTER AND FULL YEAR 2024 RESULTS
PR Newswire
CARLSBAD, Calif., Feb. 24, 2025
HIGHLIGHTS
-- Q4 consolidated Net Revenue growth of 3% and strong Adjusted EBITDA
growth both outperformed guidance.
-- Total Company operating cash flow increased 5% to $382 million and
Adjusted Free Cash Flow increased 27% to $203 million.
-- Topgolf's same venue sales, Adjusted EBITDA, Adjusted Free Cash Flow and
venue margins all exceeded expectations in Q4.
-- In 2024 the Callaway brand maintained its #1 position in U.S. market
share in total golf clubs for the third consecutive year - and 9th time
in the last 10 years - and achieved record U.S. market share in golf
ball.
CARLSBAD, Calif., Feb. 24, 2025 /PRNewswire/ -- Topgolf Callaway Brands Corp. (the "Company" or "Topgolf Callaway Brands", "we", "our", "us") $(MODG)$ announced its financial results for the fourth quarter and full year ended December 31, 2024. As discussed below, the Company's fourth quarter GAAP results included 3% revenue growth and a $1,452.0 million noncash impairment charge related to Topgolf's goodwill and intangible assets resulting in a GAAP net loss of $1,512.7 million; whereas the Company's Adjusted EBITDA increased by 45% to $101.4 million.
"We are pleased with our strong finish to the year with fourth quarter revenue, adjusted EBITDA and adjusted free cash flow exceeding expectations," commented Chip Brewer, President and CEO. "These results reflect continued strength in our Golf Equipment business, including our leading market share position in golf clubs and record market share in golf balls in 2024, as well as continued strong operating performance at TravisMathew and the successful reorganization at Jack Wolfskin. In addition, Topgolf had a strong finish to the year with same venue sales, venue margins and adjusted free cash flow all outpacing expectations. Looking forward to 2025, improving same venue sales at Topgolf is a top priority for us and we are actively implementing initiatives to address same venue sales. We also remain focused on executing our strategic initiatives, bringing exciting new products and programs to market, and driving continued operating efficiencies. However, we are also navigating some short-term headwinds, which are impacting this year's outlook, including foreign currency exchange rates and year-over-year cost pressures. Given the strength of our brands and their market positions, our operational capabilities, and our financial position, we are confident we will work through these short-term headwinds and return to growth. And, as we execute on our strategy, we believe we will be able to deliver significant shareholder value."
CONSOLIDATED RESULTS
The Company announced the following GAAP and non-GAAP financial results for the three and twelve months ended December 31, 2024 and 2023:
GAAP RESULTS
(in millions,
except
percentages and
per share data) Three Months Ended December 31, Twelve Months Ended December 31,
2024 2023 $ Change % Change 2024 2023 $ Change % Change
------------ ------------ ------------- -------- ----------- ----------- ------------ --------
Net revenues $ 924.4 $ 897.1 $ 27.3 3.0 % $ 4,239.3 $ 4,284.8 $ (45.5) (1.1) %
Goodwill and
intangible
assets
impairment 1,452.0 -- 1,452.0 n/m 1,452.0 -- 1,452.0 n/m
(Loss) income
from operations (1,460.8) (32.6) (1,428.2) n/m (1,257.2) 237.7 (1,494.9) n/m
Other expense,
net (53.3) (51.7) (1.6) 3.1 % (216.0) (202.9) (13.1) 6.5 %
(Loss) income
before taxes (1,514.1) (84.3) (1,429.8) n/m (1,473.2) 34.8 (1,508.0) n/m
Income tax
benefit (1.4) (7.2) 5.8 (80.6) % (25.5) (60.2) 34.7 (57.6) %
------------ ------------ ------------- -------- ----------- ----------- ------------ --------
Net (loss) income $ (1,512.7) $ (77.1) $ (1,435.6) n/m $ (1,447.7) $ 95.0 $ (1,542.7) n/m
============ ============ ============= ======== =========== =========== ============ ========
(Loss) earnings
per share -
diluted $ (8.23) $ (0.42) $ (7.81) n/m $ (7.88) $ 0.50 $ (8.38) n/m
Weighted-average
common shares
outstanding -
diluted 183.7 184.4 (0.7) (0.4) % 183.7 201.1 (17.4) (8.7) %
NON-GAAP RESULTS
Non-GAAP results exclude certain non-cash and non-recurring adjustments, including the $1,452.0 million non-cash Topgolf goodwill and intangible assets impairment, as defined in the Additional Information and Disclosures section of this release. The Company has also provided a reconciliation of the non-GAAP information to the most directly comparable GAAP information in the tables to this release.
(in millions,
except
percentages
and per share
data) Three Months Ended December 31, Twelve Months Ended December 31,
Constant Constant
Currency Currency
$ % vs. $ % vs.
2024 2023 Change Change 2023(1) 2024 2023 Change Change 2023(1)
--------- --------- --------- ------ -------- --------- --------- ---------- -------- --------
Net revenues $ 924.4 $ 897.1 $ 27.3 3.0 % 3.2 % $ 4,239.3 $ 4,284.8 $ (45.5) (1.1) % (0.6) %
Non-GAAP
Income (loss)
from
operations $ 18.5 $ (8.7) $ 27.2 n/m n/m $ 255.9 $ 289.2 $ (33.3) (11.5) % (8.0) %
Non-GAAP Net
(Loss)
income $ (59.8) $ (57.9) $ (1.9) 3.3 % $ 42.0 $ 83.9 $ (41.9) (49.9) %
Non-GAAP
(Loss)
earnings per
share -
diluted $ (0.33) $ (0.31) $ (0.02) 6.5 % $ 0.23 $ 0.45 $ (0.22) (48.9) %
Non-GAAP
Adjusted
EBITDA $ 101.4 $ 69.8 $ 31.6 45.3 % $ 587.7 $ 596.6 $ (8.9) (1.5) %
(1) See "Additional Information and Disclosures--Non-GAAP Information" for the
calculation methodology of constant currency measures.
FOURTH QUARTER 2024 CONSOLIDATED RESULTS COMMENTARY
(All comparisons to prior periods are calculated on a year-over-year basis, unless otherwise noted)
The Company's net revenue of $924.4 million increased 3.0% year-over-year, primarily driven by increases in Golf Equipment.
On a GAAP basis, loss from operations increased $1,428.2 million to $1,460.8 million primarily due to a non-cash $1,452.0 million impairment of the Topgolf goodwill and intangible assets. On a non-GAAP basis, income from operations increased $27.2 million to $18.5 million, driven by a $24.4 million increase in total segment operating income, reflecting improvements in all three operating segments and led by the Golf Equipment segment which delivered the largest improvement.
Adjusted EBITDA of $101.4 million increased 45.3% vs. the prior year driven by increased profitability in the Topgolf and Golf Equipment segments.
FULL YEAR 2024 CONSOLIDATED RESULTS COMMENTARY
(All comparisons to prior periods are calculated on a year-over-year basis, unless otherwise noted)
The Company's net revenue of $4,239.3 million decreased 1.1% year-over-year, primarily due to decreases in the Korea business and the Jack Wolfskin Europe business as a result of soft market conditions in those markets.
On a GAAP basis, loss from operations was $1,257.2 million compared to income from operations of $237.7 million in 2023. This decrease is primarily attributable to the non-cash $1,452.0 million impairment of Topgolf goodwill and intangible assets. On a non-GAAP basis, income from operations decreased $33.3 million to $255.9 million primarily due to a decrease in Active Lifestyle segment operating income, partially offset by an increase in Topgolf operating income.
Adjusted EBITDA decreased 1.5% to $587.7 million as a result of the decrease in the Active Lifestyle segment operating income, partially offset by the increase in Topgolf Adjusted EBITDA.
SEGMENT RESULTS
SEGMENT NET REVENUES
The table below provides net revenues by segment for the periods presented:
Constant Constant
(in millions, Currency Currency
except vs. vs.
percentages) Three Months Ended December 31, 2023(1) Twelve Months Ended December 31, 2023(1)
-------- ---------------------------------- --------
2024 2023 % Change % Change 2024 2023 % Change % Change
------------ ------------ -------- -------- ----------- ----------- -------- --------
Topgolf $ 439.0 $ 439.0 -- % (0.1) % $ 1,809.4 $ 1,761.0 2.7 % 2.6 %
Golf Equipment 224.8 199.4 12.7 % 13.3 % 1,382.0 1,387.5 (0.4) % 0.6 %
Active
Lifestyle 260.6 258.7 0.7 % 1.1 % 1,047.9 1,136.3 (7.8) % (7.2) %
------------ ------------ -------- -------- ----------- ----------- -------- --------
Net Revenues $ 924.4 $ 897.1 3.0 % 3.2 % $ 4,239.3 $ 4,284.8 (1.1) % (0.6) %
============ ============ ======== ======== =========== =========== ======== ========
(1) See "Additional Information and Disclosures--Non-GAAP Information" for the
calculation methodology of constant currency measures.
SEGMENT OPERATING INCOME (LOSS)
The table below provides operating income (loss) by segment for the periods presented:
(in millions,
except
percentages) Three Months Ended December 31, Twelve Months Ended December 31,
-------------------------------------
2024 2023 Change 2024 2023 Change
----------- ----------- ----------- ---------- ---------- -----------
Topgolf $ 26.9 $ 23.1 16.5 % $ 114.2 $ 108.8 5.0 %
% of
segment 80 10
revenue 6.1 % 5.3 % bps 6.3 % 6.2 % bps
Golf Equipment (2.7) (19.9) (86.4) % 183.6 193.3 (5.0) %
% of
segment 880 (60)
revenue (1.2) % (10.0) % bps 13.3 % 13.9 % bps
Active
Lifestyle 23.6 20.2 16.8 % 82.4 117.0 (29.6) %
% of
segment 130 (240)
revenue 9.1 % 7.8 % bps 7.9 % 10.3 % bps
----------- ----------- ----------- ---------- ---------- -----------
Total Segment
Operating
Income $ 47.8 $ 23.4 104.3 % $ 380.2 $ 419.1 (9.3) %
=========== =========== =========== ========== ========== ===========
% of total
segment 260 (80)
revenue 5.2 % 2.6 % bps 9.0 % 9.8 % bps
----------- ----------- ----------- ---------- ---------- -----------
Constant
Currency
Total Segment
Operating
Income 104.6 % (6.8) %
----------- -----------
FOURTH QUARTER 2024 SEGMENT COMMENTARY
(All comparisons to prior periods are calculated on a year-over-year basis, unless otherwise noted)
Topgolf
-- Revenue remained flat at $439.0 million, with a decline in same venue
sales offset by revenue from new venues.
-- Same venue sales were -8%, slightly better than expectations due to
improving traffic trends.
-- Segment operating income increased $3.8 million, or 16.5%, to $26.9
million and Adjusted EBITDA increased $10.3 million, or 14.1%, to $83.5
million driven primarily by revenue from additional venues, and record Q4
venue-level margins.
-- Topgolf opened two new venues in Q4 2024, compared to nine venues in Q4
2023.
Golf Equipment
-- Revenue increased $25.4 million to $224.8 million. This increase was
driven by increased revenue in both golf clubs and golf balls due to the
continued success of our clubs business and Chrome family of balls as
well as the successful launch of our new Ai-One Square 2 Square Odyssey
putters in Q4.
-- The typical seasonal operating loss in Q4 improved by $17.2 million to
$(2.7) million, driven by increased sales volume and improved gross
margins.
Active Lifestyle
-- Revenue increased $1.9 million or 0.7% to $260.6 million, driven by
TravisMathew.
-- Operating income increased $3.4 million primarily driven by the increased
revenue as well as cost savings initiatives at Jack Wolfskin resulting
from the recent right-sizing of that business.
FULL YEAR 2024 SEGMENT COMMENTARY
(All comparisons to prior periods are calculated on a year-over-year basis, unless otherwise noted)
Topgolf
-- Revenue increased $48.4 million to $1,809.4 million, with increases
driven primarily by new venues partially offset by a decrease in same
venue sales.
-- Same venue sales were -9%.
-- Operating income increased $5.4 million, or 5.0%, to $114.2 million and
Adjusted EBITDA increased $32.9 million, or 10.8%, to $337.2 million
driven primarily by the new venues, strong venue-level margins and cost
savings initiatives.
-- Topgolf ended 2024 with 100 owned and operated venues, an increase of 7,
including one acquired from BigShots.
Golf Equipment
-- Revenue decreased slightly to $1,382.0 million, which was a $5.5 million
or 0.4% decrease. The decline was due to negative foreign currency
exchange rates as revenue increased slightly on a constant currency
basis.
-- Operating income decreased by $9.7 million, primarily due to higher
freight rates and unfavorable changes in foreign exchange rates.
Active Lifestyle
-- Revenue decreased $88.4 million or 7.8% to $1,047.9 million. The decrease
was primarily driven by lower European wholesale revenue at Jack Wolfskin,
as well as lower corporate channel revenue at TravisMathew resulting from
a channel fill-in which occurred in 2023 and did not repeat in 2024. The
decrease in revenue was partially offset by growth in the Jack Wolfskin
China business and TravisMathew direct-to-consumer and wholesale
businesses.
-- Operating income decreased $34.6 million primarily as a result of the
lower revenue.
The following is a reconciliation of total segment operating income to (loss)/income before income taxes for the periods presented:
Three Months Ended December 31, Twelve Months Ended December 31,
(in millions) 2024 2023 $ Change 2024 2023 $ Change
--------------- --------------- --------------- -------------- --------------- ---------------
Total segment
operating
income: $ 47.8 $ 23.4 $ 24.4 $ 380.2 $ 419.1 $ (38.9)
Reconciling
items(1) (1,508.6) (56.0) (1,452.6) (1,637.4) (181.4) (1,456.0)
--------------- --------------- --------------- -------------- --------------- ---------------
(Loss) income
from
operations (1,460.8) (32.6) (1,428.2) (1,257.2) 237.7 (1,494.9)
Interest
expense,
net (57.7) (56.6) (1.1) (231.2) (210.2) (21.0)
Other
income,
net 4.4 4.9 (0.5) 15.2 7.3 7.9
--------------- --------------- --------------- -------------- --------------- ---------------
(Loss) income
before income
taxes $ (1,514.1) $ (84.3) $ (1,429.8) $ (1,473.2) $ 34.8 $ (1,508.0)
=============== =============== =============== ============== =============== ===============
(1) Includes corporate overhead and certain non-recurring and non-cash items
as described in the schedules to this release.
2024 BALANCE SHEET AND CASH FLOW HIGHLIGHTS
-- Cash flow from operating activities was $382.0 million, and Adjusted Free
Cash Flow was $203.1 million, driven by operating efficiencies at Topgolf,
improved working capital in the Core business and lower capital
expenditures.
-- Inventory decreased $37.1 million year-over-year to $757.3 million,
driven by decreases in the Active Lifestyle segment primarily resulting
from recent right-sizing initiatives at Jack Wolfskin.
-- Available liquidity, which is comprised of cash on hand and availability
under the Company's credit facilities, increased $54.3 million to $796.9
million compared to December 31, 2023.
BUSINESS OUTLOOK
The Company's 2025 outlook assumes a consumer environment similar to 2024 and headwinds of approximately $105 million in revenue and approximately $120 million in Adjusted EBITDA compared to 2024 as described below.
The revenue headwinds include approximately $60 million in the Core business from unfavorable changes in foreign currency exchange rates, and approximately $45 million in total headwinds from the sale of the Topgolf World Golf Tour ("WGT") mobile gaming business in 2024, a transition to a retail calendar for reporting purposes in 2025 which will cause Topgolf to lose three reporting days of financial results in 2025, as well as one less day due to last year's leap year. Excluding those headwinds, the organic revenue would be approximately the same in 2025 as in 2024.
Our Adjusted EBITDA outlook includes approximately $75 million in headwinds in the Core business relating primarily to the estimated impact of changes in foreign currency and an expected increase in tariffs, but also a reset of incentive compensation that was not paid out in 2024. Topgolf's outlook includes approximately $45 million in Adjusted EBITDA headwinds related to 2025 calendar changes, the sale of WGT, the incurrence of public company standalone costs, as well as the impact of the reset of incentive compensation. Excluding these headwinds, Total Company organic Adjusted EBITDA would be down slightly year-over-year at the mid-point, including approximately 6% organic growth in Core business EBITDA.
Expected Topgolf separation costs:
-- The Company continues to expect approximately $50 million in one-time
separation costs.
-- The guidance below includes an estimated incremental $15 million in
operating expense at Topgolf for standalone public company costs in 2025.
The Company's full year outlook is as follows:
2025 FULL YEAR OUTLOOK
(in millions, except where noted otherwise and for percentages)
2025 2024
Estimate(1) As Reported
---------------------- ------------
Consolidated Net Revenues $4.0 - $4.185B $4.24B
Core Business Revenue $2.275 - 2.35B $2.43B
Topgolf Revenue(3) $1.725 - 1.835B $1.81B
Topgolf Same Venue Sales Growth Down Mid-single Digits (9) %
Consolidated Adjusted EBITDA(2) $415 - $505 $588
Core Business Adjusted EBITDA(2) $175 - $205 $251
Topgolf Adjusted EBITDA(2)(3) $240 - $300 $337
(1) 2025 includes an estimated $60 million unfavorable year-over-year foreign
currency translation impact on Core business revenue
(2) Non-GAAP measure. See "Additional Information and Disclosures--Non-GAAP
Information" for more information and the schedules to this press release for
reconciliations to the most directly comparable GAAP measure.
(3) Topgolf guidance includes Toptracer
2025 FIRST QUARTER OUTLOOK
(in millions, except where noted otherwise)
------------
Q1 2025 Q1 2024
Estimate(1) As Reported
---------------- ------------
Consolidated Net Revenues $1.045 - $1.085B $1.14B
Consolidated Adjusted EBITDA $125 - $145 $161
(1) 2025 estimates include approximately $18 million of unfavorable foreign
currency impact on Core business revenue.
ADDITIONAL INFORMATION AND DISCLOSURES
Conference Call and Webcast
The Company will be holding a conference call at 2:00 p.m. Pacific time today, February 24, 2025, to discuss the Company's financial results, outlook and business. The call will be webcast live on our investor relations website at https://www.topgolfcallawaybrands.com/news-and-events/presentations. An earnings presentation including additional details will be available ahead of our call. A replay of the conference call will be available approximately two hours after the call ends. The replay may be accessed through the Investor Relations section of the Company's website at https://www.topgolfcallawaybrands.com.
Non-GAAP Information
The GAAP results contained in this press release and the financial statement schedules attached to this press release have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). To supplement the GAAP results, the Company has provided certain non-GAAP financial information as follows:
Constant Currency Basis. The Company provided certain information regarding the Company's financial results or projected financial results on a "constant currency basis" or as "constant currency" results. This information estimates the impact of changes in foreign currency exchange rates on the translation of the Company's current or projected future period financial results as compared to the applicable comparable period. This impact is derived by taking the current or projected local currency results and translating them into U.S. dollars based upon the foreign currency exchange rates for the applicable comparable period. It does not include any other effect of changes in foreign currency rates on the Company's results or business.
Non-Recurring and Non-cash Adjustments. The Company provided information excluding certain non-cash amortization of acquired intangible assets, including customer and distributor relationships, reacquired distribution rights and acquired developed technology related to the Company's merger with Topgolf, acquisitions of Jack Wolfskin, TravisMathew and OGIO, and reacquisition of distribution rights in the Korea apparel market. While the amortization of acquired intangible assets is excluded from the calculation of non-GAAP net income, the revenue and operating costs associated with these acquired companies is reflected in non-GAAP net income calculations, as well as the acquired assets that contribute to revenue generation. For 2024, non-recurring items include charges related to restructuring and reorganization costs in the Active Lifestyle and Golf Equipment segment, costs incurred related to the planned separation of Topgolf, currency translation adjustments for the dissolution of a foreign subsidiary, the 2024 debt repricing, a 2023 cybersecurity incident, additional impairment and abandonment of the Shankstars media game, and IT integration costs stemming primarily from the merger with Topgolf. For 2023, non-recurring items include charges related to the impairment and abandonment of the Shankstars media game, costs incurred for the 2023 debt refinancing, IT integration and implementation costs stemming from acquisitions, restructuring and reorganization charges in our Topgolf and Active Lifestyle segments and costs related to a cybersecurity incident.
Non-Cash Goodwill and Intangible Assets Impairment. The Company provided information excluding goodwill and intangible assets impairment charges related to its Topgolf operating segment. The non-cash impairment charges were taken as part of the Company's annual assessment of fair value. Given the decline in same venue sales in 2024, the company determined that the carrying value of the Topgolf assets exceeded their fair value and therefore recognized the impairment charge.
Adjusted EBITDA. The Company provided information about its results excluding interest, taxes, depreciation and amortization expenses, stock compensation expense, non-cash lease amortization expense, and the non-recurring and non-cash adjustments referenced above.
In addition, the Company has included in the schedules attached to this release a reconciliation of certain non-GAAP information to the most directly comparable GAAP information. The non-GAAP information presented in this release and related schedules should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP. The non-GAAP information may also be inconsistent with the manner in which similar measures are derived or used by other companies. Management uses such non-GAAP information for financial and operational decision-making purposes and as a means to evaluate period-over-period comparisons and in forecasting the Company's business going forward. Management believes that the presentation of such non-GAAP information, when considered in conjunction with the most directly comparable GAAP information, provides additional useful comparative information for investors in their assessment of the underlying performance, and, in some cases, financial condition, of the Company's business with regard to these items.
For forward-looking Adjusted EBITDA, non-GAAP diluted earnings per share, Core business Adjusted EBITDA and Topgolf Adjusted EBITDA (together, the "Projected Non-GAAP Measures") information provided in this release, reconciliation of such Projected Non-GAAP Measures to the most closely comparable GAAP financial measures are not provided because the Company is unable to provide such reconciliation without unreasonable efforts. The inability to provide a reconciliation is because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact net income in the future but would not impact the Projected Non-GAAP measures. These items may include certain non-cash depreciation, which will fluctuate based on the Company's level of capital expenditures, non-cash amortization of intangibles related to the Company's acquisitions, income taxes, which can fluctuate based on changes in the other items noted and/or future forecasts, and other non-recurring costs and non-cash adjustments. Historically, the Company has excluded these items from the Projected Non-GAAP Measures. The Company currently expects to continue to exclude these items in future disclosures of the Projected Non-GAAP Measures and may also exclude other items that may arise. The events that typically lead to the recognition of such adjustments are inherently unpredictable as to if or when they may occur, and therefore actual results may differ materially. This unavailable information could have a significant impact on GAAP financial measures.
Definitions
Same venue sales. The Company defines same venue sales for its Topgolf business as sales for the comparable venue base, which is defined as the number of Company-operated venues with at least 24 full fiscal months of operations in the year of comparison.
Forward-Looking Statements
Statements used in this press release that relate to future plans, events, financial results, performance, prospects, or growth opportunities, including statements relating to the Company's (and its segments') first quarter and full year 2025 guidance (including net revenues, Core business revenues, Topgolf revenues, Adjusted EBITDA, Core business adjusted EBITDA, Topgolf Adjusted EBITDA, non-GAAP diluted earnings per share, same venue sales growth, cash generation and diluted shares outstanding), our plans to pursue a separation of the Topgolf business, the timing and method of the separation, the anticipated benefits, expenses, dis-synergies and other effects of the separation, the expected financial and operational performance of, and future opportunities for, each of the two independent companies following the separation, the tax treatment of the separation, the leadership of the two independent companies following the separation, cost reduction activities, effects of Topgolf switching to retail calendar reporting in 2025, strength and demand of the Company's products and services, continued brand momentum, demand for golf and outdoor activities and apparel, continued investments in the business, consumer trends and behavior, future industry and market conditions, foreign currency effects and their impacts, tax and tariff rates, the completion of any strategic transaction, and statements of belief and any statement of assumptions underlying any of the foregoing, are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "estimate," "could," "would," "should," "intend," "may," "plan," "seek," "anticipate," "project" and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance. These statements are based upon current information and expectations. Accurately estimating the forward-looking statements is based upon various risks and unknowns, including uncertainty regarding global economic conditions, including relating to inflation, decreases in consumer demand and spending, and any severe or prolonged economic downturn; our ability to grow same venue sales; our ability to successfully execute planned and potential transactions, including our planned separation of Topgolf, and the potential to realize the expected benefits of such transactions in the expected timeframes or at all; our ability to satisfy the closing conditions to complete the separation on a timely basis, or at all; the Company's level of indebtedness; continued availability of credit facilities and liquidity and ability to comply with applicable debt covenants; effectiveness of capital allocation and cost/expense reduction efforts; continued brand momentum and product success; growth in the direct-to-consumer and e-commerce channels; ability to realize the benefits of the continued investments in the Company's business; consumer acceptance of and demand for the Company's and its subsidiaries' products and services; any changes in U.S. trade, tax or other policies, including restrictions on imports or an increase in import tariffs; future retailer purchasing activity, which can be significantly negatively affected by adverse industry conditions and overall retail inventory levels; the level of promotional activity in the marketplace; and future changes in foreign currency exchange rates and the degree of effectiveness of the Company's hedging programs. Actual results may differ materially from those estimated or anticipated as a result of these risks and unknowns or other risks and uncertainties, including the effect of terrorist activity, armed conflict, natural disasters or pandemic diseases on the economy generally, on the level of demand for the Company's and its subsidiaries' products and services or on the Company's ability to manage its operations, supply chain and delivery logistics in such an environment; delays, difficulties or increased costs in the supply of components or commodities needed to manufacture the Company's products or in manufacturing the Company's products; and a decrease in participation levels in golf generally. For additional information concerning these and other risks and uncertainties that could affect these statements and the Company's business, see the Company's Annual Report on Form 10-K for the year ended December 31, 2024 as well as other risks and uncertainties detailed from time to time in the Company's reports on Forms 10-K, 10-Q and 8-K subsequently filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
About Topgolf Callaway Brands
Topgolf Callaway Brands Corp. (NYSE: MODG) is an unrivaled tech-enabled Modern Golf and active lifestyle company delivering leading golf equipment, apparel, and entertainment, with a portfolio of global brands including Topgolf, Callaway Golf, TravisMathew, Toptracer, Odyssey, OGIO and Jack Wolfskin. "Modern Golf" is the dynamic and inclusive ecosystem that includes both on-course and off-course golf. For more information, please visit https://www.topgolfcallawaybrands.com.
Investor Contact
Katina Metzidakis
invrelations@tcbrands.com
TOPGOLF CALLAWAY BRANDS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
December 31, December 31,
2024 2023
------------------- -------------------
ASSETS
Current assets:
Cash and cash equivalents $ 445.0 $ 393.5
Restricted cash 0.7 0.8
Accounts receivable, net 175.7 200.5
Inventories 757.3 794.4
Other current assets 222.0 238.9
------------------- -------------------
Total current assets 1,600.7 1,628.1
Property, plant and equipment, net 2,219.0 2,156.5
Operating lease right-of-use
assets, net 1,339.2 1,410.1
Goodwill and intangible assets,
net 1,992.8 3,494.2
Other assets, net 484.4 431.7
------------------- -------------------
Total assets $ 7,636.1 $ 9,120.6
=================== ===================
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 451.3 $ 480.5
Accrued employee compensation
and benefits 113.4 113.1
Asset-based credit facilities 25.4 54.7
Operating lease liabilities,
short-term 89.3 86.4
Construction advances 6.0 59.3
Deferred revenue 96.0 110.9
Other current liabilities 44.5 42.7
------------------- -------------------
Total current liabilities 825.9 947.6
Long-term debt, net 1,457.9 1,518.2
Operating lease liabilities,
long-term 1,377.1 1,433.4
Deemed landlord financing
obligations 1,194.8 980.0
Deferred taxes, net 24.9 36.7
Other long-term liabilities 347.8 326.5
Total shareholders' equity 2,407.7 3,878.2
------------------- -------------------
Total liabilities and
shareholders' equity $ 7,636.1 $ 9,120.6
=================== ===================
TOPGOLF CALLAWAY BRANDS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------------------------ -----------------------------------------------
2024 2023 2024 2023
----------------------- ----------------------- ----------------------- ----------------------
Net revenues:
Products $ 489.1 $ 461.9 $ 2,447.8 $ 2,540.1
Services 435.3 435.2 1,791.5 1,744.7
----------------------- ----------------------- ----------------------- ----------------------
Total net
revenues 924.4 897.1 4,239.3 4,284.8
Costs and
expenses:
Cost of
products 284.9 276.9 1,401.7 1,443.9
Cost of
services,
excluding
depreciation
and
amortization 45.8 45.4 186.7 186.8
Other venue
expense 315.1 317.6 1,303.5 1,252.3
Selling,
general and
administrative
expense 262.6 246.0 1,045.7 1,036.6
Research and
development
expense 19.9 34.2 92.1 101.6
Goodwill and
intangible
assets
impairment 1,452.0 -- 1,452.0 --
Venue
pre-opening
costs 4.9 9.6 14.8 25.9
----------------------- ----------------------- ----------------------- ----------------------
Total costs
and
expenses 2,385.2 929.7 5,496.5 4,047.1
----------------------- ----------------------- ----------------------- ----------------------
(Loss) income from
operations (1,460.8) (32.6) (1,257.2) 237.7
----------------------- ----------------------- ----------------------- ----------------------
Interest expense,
net (57.7) (56.6) (231.2) (210.2)
Other income, net 4.4 4.9 15.2 7.3
----------------------- ----------------------- ----------------------- ----------------------
(Loss) income
before taxes (1,514.1) (84.3) (1,473.2) 34.8
----------------------- ----------------------- ----------------------- ----------------------
Income tax
benefit (1.4) (7.2) (25.5) (60.2)
----------------------- ----------------------- ----------------------- ----------------------
Net (loss) income $ (1,512.7) $ (77.1) $ (1,447.7) $ 95.0
======================= ======================= ======================= ======================
(Loss) earnings
per common share:
Basic $ (8.23) $ (0.42) $ (7.88) $ 0.51
Diluted $ (8.23) $ (0.42) $ (7.88) $ 0.50
Weighted-average
common shares
outstanding:
Basic 183.7 184.4 183.7 185.0
Diluted 183.7 184.4 183.7 201.1
TOPGOLF CALLAWAY BRANDS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In millions)
(Unaudited)
Twelve Months Ended
December 31,
---------------------------
2024 2023
------------ -------------
Cash flows from operating activities:
Net (loss) income $ (1,447.7) $ 95.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 268.4 239.7
Non-cash interest on financing and deemed
landlord financed leases 29.6 22.8
Amortization of debt discount and issuance
costs 5.7 6.5
Goodwill and intangible assets impairment 1,452.0 --
Impairment on long-lived assets 7.4 11.7
Deferred taxes, net (48.2) (88.9)
Share-based compensation 37.0 46.7
Loss on debt modification 4.7 10.5
Loss on disposal and the dissolution of
long-lived assets 7.6 --
Loss on sale of business lines 9.6 --
Unrealized net losses on hedging
instruments and foreign currency 7.5 8.7
Other 1.7 1.4
Changes in assets and liabilities, net of
impacts from business combinations 46.7 10.6
------------ -------------
Net cash provided by operating activities 382.0 364.7
------------ -------------
Cash flows from investing activities, net of
impacts of business combinations:
Capital expenditures (295.4) (482.0)
Asset acquisitions, net of cash acquired -- (31.2)
Business combinations, net of cash acquired (23.3) (29.7)
Proceeds from government grants 1.0 3.0
Investment in golf-related ventures (4.3) (2.5)
Acquisition of intangible assets (3.2) (0.8)
Proceeds from sale of property and equipment 0.6 0.3
Proceeds from sale of business lines 27.3 --
------------ -------------
Net cash used in investing activities (297.3) (542.9)
------------ -------------
Cash flows from financing activities:
Repayments of long-term debt and DLF
obligations (78.9) (794.5)
Proceeds from borrowings on long-term debt -- 1,224.8
Repayments of credit facilities, net (25.5) (272.4)
Debt issuance costs (0.2) (1.8)
Repayments of financing leases (3.2) (2.8)
Proceeds from lease financing 115.5 274.3
Exercise of stock options 0.1 4.2
Acquisition of treasury stock (31.4) (56.0)
Net cash (used in) provided by financing
activities (23.6) 375.8
------------ -------------
Effect of exchange rate changes on cash, cash
equivalents and restricted cash (9.6) (2.2)
------------ -------------
Net increase in cash, cash equivalents and
restricted cash 51.5 195.4
Cash, cash equivalents and restricted cash at
beginning of period 398.8 203.4
------------ -------------
Cash, cash equivalents and restricted cash at
end of period 450.3 398.8
------------ -------------
Less: restricted cash(1) (5.3) (5.3)
------------ -------------
Cash and cash equivalents at end of period $ 445.0 $ 393.5
============ =============
(1) Includes $0.7 million and $0.8 million of short-term restricted cash and
$4.6 million and $4.5 million of long-term restricted cash included in other
assets for the periods ended December 31, 2024 and 2023, respectively.
TOPGOLF CALLAWAY BRANDS CORP.
CONSOLIDATED NET REVENUES AND OPERATING SEGMENT INFORMATION
(In millions)
(Unaudited)
Net Revenues by Category
------------------------------------------------------------------------
Constant
Currency
Three Months Ended vs.
December 31, Growth/(Decline) 2023(1)
--------------------------------- -------------------------- ---------
2024 2023 Dollars Percent Percent
--------------- ---------------- ---------------- -------- ---------
Net revenues:
Venues $ 420.0 $ 422.2 $ (2.2) (0.5 %) (0.6 %)
Topgolf
other
business
lines 19.0 16.8 2.2 13.1 % 13.1 %
Golf Clubs 178.8 160.2 18.6 11.6 % 12.3 %
Golf Balls 46.0 39.2 6.8 17.3 % 17.6 %
Apparel 191.3 181.9 9.4 5.2 % 5.5 %
Gear,
Accessories
& Other 69.3 76.8 (7.5) (9.8 %) (9.4 %)
--------------- ---------------- ---------------- -------- ---------
Total net
revenues $ 924.4 $ 897.1 $ 27.3 3.0 % 3.2 %
=============== ================ ================ ======== =========
(1) See "Additional Information and Disclosures--Non-GAAP Information" for the
calculation methodology of constant currency measures.
Net Revenues by Region
Constant
Currency
Three Months Ended vs.
December 31, Growth/(Decline) 2023(1)
--------------------------------- -------------------------- ---------
2024 2023 Dollars Percent Percent
--------------- ---------------- ---------------- -------- ---------
Net revenues:
United
States $ 657.6 $ 646.3 $ 11.3 1.7 % 1.7 %
Europe 119.0 117.3 1.7 1.4 % 0.6 %
Asia 123.9 112.8 11.1 9.8 % 12.1 %
Rest of
world 23.9 20.7 3.2 15.5 % 16.4 %
--------------- ---------------- ---------------- -------- ---------
Total net
revenues $ 924.4 $ 897.1 $ 27.3 3.0 % 3.2 %
=============== ================ ================ ======== =========
(1) See "Additional Information and Disclosures--Non-GAAP Information" for the
calculation methodology of constant currency measures.
Operating Segment Information
Constant
Currency
Three Months Ended vs.
December 31, Growth/(Decline) 2023(1)
--------------------------------- -------------------------- ---------
2024 2023 Dollars Percent Percent
--------------- ---------------- ---------------- -------- ---------
Net revenues:
Topgolf $ 439.0 $ 439.0 $ -- -- % (0.1 %)
Golf
Equipment 224.8 199.4 25.4 12.7 % 13.3 %
Active
Lifestyle 260.6 258.7 1.9 0.7 % 1.1 %
--------------- ---------------- ---------------- -------- ---------
Total net
revenues $ 924.4 $ 897.1 $ 27.3 3.0 % 3.2 %
=============== ================ ================ ======== =========
Segment
operating
income:
Topgolf $ 26.9 $ 23.1 $ 3.8 16.5 %
Golf
Equipment (2.7) (19.9) 17.2 (86.4 %)
Active
Lifestyle 23.6 20.2 3.4 16.8 %
--------------- ---------------- ---------------- --------
Total segment
operating
income 47.8 23.4 24.4 104.3 %
Corporate
G&A and
other(2) (1,508.6) (56.0) (1,452.6) n/m
--------------- ---------------- ---------------- --------
Total
operating
loss (1,460.8) (32.6) (1,428.2) n/m
Interest
expense,
net (57.7) (56.6) (1.1) 1.9 %
Other
income,
net 4.4 4.9 (0.5) (10.2 %)
--------------- ---------------- ---------------- --------
Total loss
before
income
taxes $ (1,514.1) $ (84.3) $ (1,429.8) n/m
=============== ================ ================ ========
(1) See "Additional Information and Disclosures--Non-GAAP Information" for the
calculation methodology of constant currency measures.
(2) Amount includes corporate general and administrative expenses not utilized
by management in determining segment profitability, in addition to certain
non-cash and non-recurring items described in the Supplemental Financial
Information and Non-GAAP Reconciliation table below.
TOPGOLF CALLAWAY BRANDS CORP.
CONSOLIDATED NET REVENUES AND OPERATING SEGMENT INFORMATION
(In millions)
(Unaudited)
Net Revenues by Category
Constant
Currency
Twelve Months Ended vs.
December 31, Growth/(Decline) 2023(1)
-------------------------------- ------------------------- --------
2024 2023 Dollars Percent Percent
--------------- --------------- --------------- -------- --------
Net revenues:
Venues $ 1,728.3 $ 1,692.6 $ 35.7 2.1 % 2.0 %
Topgolf
other
business
lines 81.1 68.4 12.7 18.6 % 17.7 %
Golf Clubs 1,060.9 1,073.5 (12.6) (1.2 %) -- %
Golf Balls 321.1 314.0 7.1 2.3 % 2.7 %
Apparel 676.5 713.2 (36.7) (5.1 %) (4.5 %)
Gear,
Accessories
& Other 371.4 423.1 (51.7) (12.2 %) (11.8 %)
--------------- --------------- --------------- -------- --------
Total net
revenues $ 4,239.3 $ 4,284.8 $ (45.5) (1.1 %) (0.6 %)
=============== =============== =============== ======== ========
(1) See "Additional Information and Disclosures--Non-GAAP Information" for the
calculation methodology of constant currency measures.
Net Revenues by Region
Constant
Currency
Twelve Months Ended vs.
December 31, Growth/(Decline) 2023(1)
------------------------- --------
2024 2023 Dollars Percent Percent
--------------- --------------- --------------- -------- --------
Net revenues:
United
States $ 3,102.5 $ 3,081.4 $ 21.1 0.7 % 0.7 %
Europe 511.1 540.6 (29.5) (5.5 %) (6.7 %)
Asia 487.6 531.9 (44.3) (8.3 %) (3.9 %)
Rest of
world 138.1 130.9 7.2 5.5 % 6.4 %
--------------- --------------- --------------- -------- --------
Total net
revenues $ 4,239.3 $ 4,284.8 $ (45.5) (1.1 %) (0.6 %)
=============== =============== =============== ======== ========
(1) See "Additional Information and Disclosures--Non-GAAP Information" for the
calculation methodology of constant currency measures.
Operating Segment Information
Constant
Currency
Twelve Months Ended vs.
December 31, Growth/(Decline) 2023(1)
------------------------- --------
2024 2023 Dollars Percent Percent
--------------- --------------- --------------- -------- --------
Net revenues:
Topgolf $ 1,809.4 $ 1,761.0 $ 48.4 2.7 % 2.6 %
Golf
Equipment 1,382.0 1,387.5 (5.5) (0.4 %) 0.6 %
Active
Lifestyle 1,047.9 1,136.3 (88.4) (7.8 %) (7.2 %)
--------------- --------------- --------------- -------- --------
Total net
revenues $ 4,239.3 $ 4,284.8 $ (45.5) (1.1 %) (0.6 %)
=============== =============== =============== ======== ========
Segment
operating
income:
Topgolf $ 114.2 $ 108.8 $ 5.4 5.0 %
Golf
Equipment 183.6 193.3 (9.7) (5.0) %
Active
Lifestyle 82.4 117.0 (34.6) (29.6) %
--------------- --------------- --------------- --------
Total segment
operating
income 380.2 419.1 (38.9) (9.3) %
Corporate
costs and
expenses(2) (1,637.4) (181.4) (1,456.0) n/m
--------------- --------------- --------------- --------
Total
operating
(loss)
income (1,257.2) 237.7 (1,494.9) n/m
Interest
expense,
net (231.2) (210.2) (21.0) 10.0 %
Other
income,
net 15.2 7.3 7.9 108.2 %
--------------- --------------- --------------- --------
Total (loss)
income
before
income
taxes $ (1,473.2) $ 34.8 $ (1,508.0) n/m
=============== =============== =============== ========
(1) See "Additional Information and Disclosures--Non-GAAP Information" for the
calculation methodology of constant currency measures.
(2) Amount includes corporate general and administrative expenses not utilized
by management in determining segment profitability, in addition to certain
non-cash and non-recurring items described in the Supplemental Financial
Information and Non-GAAP Reconciliation table below.
TOPGOLF CALLAWAY BRANDS CORP.
SUPPLEMENTAL FINANCIAL INFORMATION AND NON-GAAP RECONCILIATION
(In millions, except per share data)
(Unaudited)
Three Months Ended December 31,
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023
------------------------------------------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------------------------------------------------------------
Non-Cash Non-Cash
Non-Cash Goodwill and Non-Cash Goodwill and
Acquisition- Intangible Non- Acquisition- Intangible Non-
related Assets Recurring Tax Valuation Non- related Assets Recurring Tax Valuation Non-
GAAP Amortization(1) Impairment (2) Items(3) Allowance GAAP GAAP Amortization(1) Impairment (2) Items(4) Allowance(5) GAAP
(Loss)
income
from
operations $ (1,460.8) $ (2.8) $ (1,452.0) $ (24.5) $ -- $ 18.5 $ (32.6) $ (2.8) $ -- $ (21.1) $ -- $ (8.7)
Net (loss)
income $ (1,512.7) $ (2.3) $ (1,424.6) $ (26.0) $ -- $ (59.8) $ (77.1) $ (2.1) $ -- $ (16.0) $ (1.1) $ (57.9)
(Loss)
earnings
per share
- diluted
(5) $ (8.23) $ (0.01) $ (7.76) $ (0.14) $ -- $ (0.33) $ (0.42) $ (0.01) $ -- $ (0.09) $ (0.01) $ (0.31)
(1) Includes the amortization of acquired intangible assets, including
customer and distributor relationships, reacquired distribution rights and
acquired developed technology related to our merger with Topgolf, acquisitions
of Jack Wolfskin, TravisMathew and OGIO, and reacquisition of distribution
rights in the Korea apparel market (collectively, the "Acquisitions"). While
the amortization of acquired intangible assets is excluded from our
calculation of non-GAAP net income, the revenue, operating costs and
associated acquired assets that contribute to the revenue generation
associated with these acquired companies is reflected in our calculation of
non-GAAP net income. Starting in the second quarter of 2024, the depreciation
and amortization associated with purchase accounting adjustments stemming from
these acquisitions is excluded from our non-GAAP adjustments. As such, prior
period amounts have been recast in order to conform with the current period
presentation. For the three months ended December 31, 2024 and 2023, non-cash
depreciation and amortization related to these purchase accounting adjustments
was $1.3 million and $2.1 million, respectively.
(2) Represents non-cash goodwill and intangible assets impairment recognized
during the fourth quarter of 2024 in our Topgolf operating segment.
(3) Primarily includes a $9.6 million loss related to the sale of the WGT
business, $8.3 million of restructuring and reorganization charges, and $5.5
million of costs incurred related to the planned separation of Topgolf.
(4) Primarily includes $12.7 million in total charges related to the
impairment and abandonment of the Shankstars media game in the Topgolf
operating segment, $6.5 million of reorganization costs in the Topgolf and
Active Lifestyle segments, and $0.9 million in IT costs related to a
cybersecurity incident.
(5) Release of tax valuation allowances recorded in connection with the merger
with Topgolf.
(6) Diluted loss per share and diluted weighted average common shares
outstanding are the same as basic loss per share and basic weighted average
common shares outstanding due to a net loss position.
Twelve months ended December 31,
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023
------------------------------------------------------------------------------------------------------------------------ -----------------------------------------------------------------------------------------------------------------------------
Non-Cash Non-Cash
Non-Cash Goodwill and Non-Cash Goodwill and
Acquisition- Intangible Non- Acquisition- Intangible Non-
related Assets Recurring Tax Valuation Non- related Assets Recurring Tax Valuation Non-
GAAP Amortization(1) Impairment (2) Items(3) Allowance(5) GAAP GAAP Amortization(1) Impairment (2) Items(4) Allowance(5) GAAP
(Loss)
income
from
operations $ (1,257.2) $ (11.5) $ (1,452.0) $ (49.6) $ -- $ 255.9 $ 237.7 $ (14.0) $ -- $ (37.5) $ -- $ 289.2
Net (loss)
income $ (1,447.7) $ (9.6) $ (1,424.6) $ (55.5) $ -- $ 42.0 $ 95.0 $ (10.6) $ -- $ (36.6) $ 58.3 $ 83.9
(Loss)
earnings
per share
- diluted
(5) $ (7.88) $ (0.05) $ (7.72) $ (0.30) $ -- $ 0.23 $ 0.50 $ (0.05) $ -- $ (0.18) $ 0.29 $ 0.45
(1) Includes the amortization of acquired intangible assets, including
customer and distributor relationships, reacquired distribution rights and
acquired developed technology related to our merger with Topgolf, acquisitions
of Jack Wolfskin, TravisMathew and OGIO, and reacquisition of distribution
rights in the Korea apparel market (collectively, the "Acquisitions"). While
the amortization of acquired intangible assets is excluded from our
(MORE TO FOLLOW) Dow Jones Newswires
February 24, 2025 16:15 ET (21:15 GMT)
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.