HIGHLIGHTS
- Q1 Revenue of $1.144 billion and
Topgolf same venue sales of -7% – both in line with
expectations.
- Net Income of $7 million,
Non-GAAP Net Income of $16 million
and Adjusted EBITDA of $161 million –
all ahead of expectations.
- Company reaffirmed full year Adjusted EBITDA guidance and
increased full year earnings per share and cash generation
outlook.
- Ai Smoke clubs achieved #1 U.S.
market share in Driver, Fairway Woods and Irons and the new Chrome
Tour golf balls drove record 11% market share in the premium ball
category.
- Successfully completed term loan repricing, repurchased an
additional one million shares of common stock and announced plans
to pay down $50 million of term loan
debt.
CARLSBAD, Calif., May 8, 2024
/PRNewswire/ -- Topgolf Callaway Brands Corp. (the "Company" or
"Topgolf Callaway Brands", "we", "our", "us") (NYSE: MODG)
announced its financial results for the first quarter ended
March 31, 2024.
"We are pleased with our overall first quarter results with
consolidated revenue and Topgolf same venue sales being in
line with our guidance and our achieving better than expected net
income, Adjusted EBITDA, EPS and cash performance," commented
Chip Brewer, President and Chief
Executive Officer of Topgolf Callaway Brands. "We are particularly
pleased with Topgolf's continued operational improvements as well
as our performance in Golf Equipment where we gained market share
with our new Ai Smoke clubs
achieving the #1 market share in Driver, Fairway Woods and Irons
and our new Chrome Tour balls driving our highest market share ever
in the premium golf ball category. Finally, we continued our
digital transformation with the recent launch of our new
cross-brand consumer data platform, which will help unlock further
synergies between our brands. Despite strong performance in our
core businesses, we are lowering our annual revenue guidance by
$80 million to a range of
$4,435 to $4,475 million reflecting significant currency
volatility and weaker trends at our Jack Wolfskin business. That
said, we remain confident in our ability to drive bottom line and
cash improvements and are reaffirming our adjusted EBITDA guidance
and increasing our EPS and cash flow expectations, as well as
paying off $50 million of term loan
debt."
CONSOLIDATED RESULTS
The Company announced the following GAAP and non-GAAP financial
results for the three months ended March 31,
2024 and 2023:
GAAP
RESULTS
|
|
|
|
|
|
|
|
(in millions, except
percentages and per share data)
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
$
Change
|
|
%
Change
|
Net revenues
|
$
1,144.2
|
|
$
1,167.4
|
|
$
(23.2)
|
|
(2.0) %
|
Income from
operations
|
66.9
|
|
80.5
|
|
(13.6)
|
|
(16.9) %
|
Other expense,
net
|
(55.4)
|
|
(59.7)
|
|
4.3
|
|
(7.2) %
|
Income before
taxes
|
11.5
|
|
20.8
|
|
(9.3)
|
|
(44.7) %
|
Income tax provision
(benefit)
|
5.0
|
|
(4.2)
|
|
9.2
|
|
n/m
|
Net income
|
$
6.5
|
|
$ 25.0
|
|
$
(18.5)
|
|
(74.0) %
|
Earnings per share -
diluted
|
$ 0.04
|
|
$ 0.13
|
|
$
(0.09)
|
|
(69.2) %
|
Weighted-average common
shares outstanding - diluted
|
184.4
|
|
201.5
|
|
(17.1)
|
|
(8.5) %
|
NON-GAAP RESULTS
Non-GAAP results exclude certain non-cash and non-recurring
adjustments 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
March 31,
|
|
2024
|
|
2023
|
|
$
Change
|
|
%
Change
|
|
Constant
Currency
vs. 2023(1)
|
Net revenues
|
$
1,144.2
|
|
$
1,167.4
|
|
$
(23.2)
|
|
(2.0) %
|
|
(1.3) %
|
Income from
operations
|
74.4
|
|
91.0
|
|
(16.6)
|
|
(18.2) %
|
|
(13.0) %
|
Other expense,
net
|
(50.6)
|
|
(48.4)
|
|
(2.2)
|
|
4.5 %
|
|
|
Income before
taxes
|
23.8
|
|
42.6
|
|
(18.8)
|
|
(44.1) %
|
|
|
Income tax
provision
|
8.0
|
|
9.4
|
|
(1.4)
|
|
(14.9) %
|
|
|
Net income
|
$ 15.8
|
|
$ 33.2
|
|
$
(17.4)
|
|
(52.4) %
|
|
|
Earnings per share -
diluted
|
$ 0.09
|
|
$ 0.17
|
|
$
(0.08)
|
|
(49.6) %
|
|
|
Weighted-average common
shares outstanding - diluted
|
184.4
|
|
201.5
|
|
(17.1)
|
|
(8.5) %
|
|
|
|
(1)
See "Additional Information and
Disclosures—Non-GAAP Information" for the calculation methodology
of constant currency measures.
|
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 $1,144.2
million was in line with our expectations and decreased 2.0%
year-over-year, due to a 15.2% decrease in the Active Lifestyle
segment, which offset a 4.8% and 1.4% increase in the Topgolf and
Golf Equipment segments, respectively.
Income from operations decreased $13.6 million on a GAAP basis and
$16.6 million on a non-GAAP
basis. The decrease was largely driven by a $12.6 million decrease in Active Lifestyle
operating income, partially offset by increases in Golf Equipment
and Topgolf operating income.
Net income decreased $18.5 million
on a GAAP basis and $17.4 million on
a non-GAAP basis compared to the same period in the prior year.
This decrease was primarily attributable to the decrease in
operating income previously mentioned.
Adjusted EBITDA of $160.9 million grew 2.3%, driven primarily
by an $11.7 million increase at
Topgolf.
SEGMENT RESULTS
SEGMENT NET REVENUES
The table below provides net revenues by segment for the periods
presented:
(in millions, except
percentages)
|
Three Months Ended
March 31,
|
|
Constant
Currency
vs.
2023(1)
|
|
2024
|
|
2023
|
|
%
Change
|
|
%
Change
|
Topgolf
|
$
422.8
|
|
$
403.5
|
|
4.8 %
|
|
4.6 %
|
Golf
Equipment
|
449.9
|
|
443.7
|
|
1.4 %
|
|
2.7 %
|
Active
Lifestyle
|
271.5
|
|
320.2
|
|
(15.2) %
|
|
(14.4) %
|
Net Revenues
|
$
1,144.2
|
|
$
1,167.4
|
|
(2.0) %
|
|
(1.3) %
|
|
(1)
See "Additional Information and
Disclosures—Non-GAAP Information" for the calculation methodology
of constant currency measures.
|
SEGMENT OPERATING INCOME
The table below provides the breakout of segment operating
income for the periods presented:
|
|
(in millions, except
percentages)
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
Change
|
Topgolf
|
$
2.9
|
|
$
2.8
|
|
3.6 %
|
% of segment
revenue
|
0.7 %
|
|
0.7 %
|
|
—
bps
|
Golf
Equipment
|
82.1
|
|
81.6
|
|
0.6 %
|
% of segment
revenue
|
18.2 %
|
|
18.4 %
|
|
(20)
bps
|
Active
Lifestyle
|
24.7
|
|
37.3
|
|
(33.8) %
|
% of segment
revenue
|
9.1 %
|
|
11.6 %
|
|
(250) bps
|
Total Segment Operating
Income
|
$ 109.7
|
|
$ 121.7
|
|
(9.9) %
|
% of total segment
revenue
|
9.6 %
|
|
10.4 %
|
|
(80)
bps
|
Constant
Currency
Total Segment Operating
Income
|
|
|
|
|
(6.0) %
|
FIRST QUARTER 2024 SEGMENT COMMENTARY
(All comparisons to prior periods are calculated on a
year-over-year basis, unless otherwise noted)
Topgolf
- Segment revenue increased $19.3
million or 4.8%, to $422.8
million, driven primarily by new venues.
- Same venue sales of -7% was in line with our expectations and
reflects lapping a post-COVID surge in the corporate events
business in Q1 2023 and, separately, extreme weather during
January 2024.
- Segment operating income increased $0.1
million to $2.9 million and
Segment Adjusted EBITDA increased $11.7
million, or 24.3%, to $59.8
million primarily due to increased revenue from new venues
and improved venue level margins.
Golf Equipment
- Segment revenue increased $6.2
million or 1.4% to $449.9
million, primarily due to strong sales from our recent
Chrome Tour ball launches as well as the strength of our new
Ai Smoke golf clubs.
- Segment operating income increased $0.5
million, primarily due to increased operating
efficiencies.
Active Lifestyle
- Segment revenue decreased $48.7
million or 15.2% to $271.5
million resulting primarily from lower wholesale revenue at
Jack Wolfskin driven primarily by a soft macro backdrop in
Europe as well as a corporate
channel sell-in at TravisMathew which occurred during the first
quarter of 2023 and did not recur in Q1 2024, as expected.
- Segment operating income decreased $12.6
million due to the decrease in revenue previously
mentioned.
The following is a reconciliation of total segment operating
income to income before income taxes for the periods presented:
|
Three Months Ended
March 31,
|
(in
millions)
|
2024
|
|
2023
|
|
$
Change
|
Total segment operating
income:
|
$
109.7
|
|
$
121.7
|
|
$
(12.0)
|
Reconciling
items(1)
|
(42.8)
|
|
(41.2)
|
|
(1.6)
|
Income from
operations
|
66.9
|
|
80.5
|
|
(13.6)
|
Interest expense,
net
|
(58.8)
|
|
(49.6)
|
|
(9.2)
|
Other income
(expense), net
|
3.4
|
|
(10.1)
|
|
13.5
|
Income before income
taxes
|
$
11.5
|
|
$
20.8
|
|
$
(9.3)
|
|
|
|
|
|
|
(1)
Includes corporate overhead and certain
non-recurring and non-cash items as described in the schedules to
this release.
|
2024 BALANCE SHEET HIGHLIGHTS
- Inventory decreased $226.9
million year-over-year to $702.9
million.
- The Company repriced its Term Loan B, reducing its interest
rate by 60 basis points, which is expected to result in annualized
interest expense savings of approximately $7
million based upon current outstanding principal
amounts.
- Since its last earnings call, the Company has repurchased one
million shares of its common stock for a total cost of $16.1 million.
- The Company announced plans to accelerate the repayment of the
outstanding principal of its Term Loan B with a $50 million partial prepayment at the end of
May.
BUSINESS OUTLOOK
The Company's updated outlook reflects increased foreign
currency headwinds, and higher levels of inventory at retail and
softer market conditions in Europe
negatively impacting the Jack Wolfskin business. Despite these
headwinds, the Company is maintaining its Adjusted EBITDA outlook.
The Company is also increasing its earnings per share expectations
by $0.05 cents per share to reflect
the repricing of its term loan, planned repayment of $50 million in term loan debt and improved cash
flow. The 2024 projections set forth below are based on the
Company's best estimates at this time.
2024 FULL YEAR
OUTLOOK
|
(in millions, except
where noted otherwise and for percentages and per share
data)
|
|
|
|
|
|
2024
Current
Estimate(1)
|
2024
Previous
Estimate
|
2023
As
Reported(1)
|
Consolidated Net
Revenues
|
$4,435 -
$4,475
|
$4,515 -
$4,555
|
$4,285
|
Topgolf
Revenue
|
Approx.
$1,960
|
Approx.
$1,960
|
$1,761
|
Topgolf Same Venue
Sales Growth
|
Slightly positive to
down
low single digits
|
Approx. Flat
|
1 %
|
Consolidated Adjusted
EBITDA(2)
|
$620 - $640
|
$620 - $640
|
$597
|
Topgolf Adjusted
EBITDA(2)
|
Approx. $350
|
Approx. $350
|
$304
|
Non-GAAP Diluted
Earnings per Share(2)
|
$0.31 -
$0.39
|
$0.26 -
$0.34
|
$0.49
|
Diluted Shares
Outstanding
|
Approx. 200
|
Approx. 202
|
201
|
|
|
|
|
|
(1)
|
2024 includes an
estimated $45 million unfavorable year-over-year foreign currency
impact on revenue and an estimated $24 million unfavorable foreign
currency impact on profit translation. 2023 As Reported amounts
include $13.4 million in positive hedge gains.
|
(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.
|
2024 SECOND QUARTER
OUTLOOK
|
(in
millions)
|
|
|
|
|
Q2
2024
Estimate(1)
|
|
Q2
2023
As
Reported(1)
|
Consolidated Net
Revenues
|
$1,180 -
$1,200
|
|
$1,180
|
Consolidated Adjusted
EBITDA
|
$191 - $201
|
|
$206
|
|
|
(1)
|
2024 estimates include
approximately $17 million of unfavorable foreign currency impact on
revenue and approximately $9 million of unfavorable foreign
currency impact on profit translation. Q2 2023 As Reported amounts
include minimal hedge gains.
|
ADDITIONAL INFORMATION AND DISCLOSURES
Conference Call and Webcast
The Company will be holding a conference call at 2:00 p.m. Pacific time today, May 8, 2024,
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.
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 and
depreciation of acquired intangible assets and purchase accounting
adjustments. For 2024, non-recurring items include charges related
to our debt repricing, costs related to a 2023 cybersecurity
incident, and IT integration and implementation costs stemming
primarily from the merger with Topgolf. For 2023, non-recurring
items include legal costs, credit agency fees, and losses
associated with our 2023 debt modification, combined with IT
integration and implementation costs stemming primarily from the
merger with Topgolf, charges related to the impairment and
abandonment of the Shankstars media game, restructuring and
reorganization charges in our Topgolf and Active Lifestyle segments
and costs related to a 2023 cybersecurity incident.
Adjusted EBITDA. The Company provides 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 items
referenced above.
Adjusted Free Cash Flow. The Company defines Adjusted
Free Cash Flow as cash flows from operating activities, less
capital expenditures net of proceeds from lease financing and net
of proceeds from government grants.
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, 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') second quarter and full year 2024 guidance
(including net revenues, Topgolf revenues, Adjusted EBITDA, Topgolf
Adjusted EBITDA, non-GAAP diluted earnings per share, same venue
sales growth, cash generation and diluted shares outstanding),
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, expected interest savings from
the debt repricing, the planned accelerated pay down of the Term
Loan B 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; costs, expenses or
difficulties related to the merger with Topgolf, including the
integration of the Topgolf business; failure to realize the
expected benefits and synergies of the Topgolf merger in the
expected timeframes 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, 2023 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, Jack Wolfskin, and World
Golf Tour ("WGT"). "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)
|
|
|
March 31,
2024
|
|
December 31,
2023
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
233.9
|
|
$
393.5
|
Restricted
cash
|
0.7
|
|
0.8
|
Accounts receivable,
net
|
423.9
|
|
200.5
|
Inventories
|
702.9
|
|
794.4
|
Other current
assets
|
231.8
|
|
238.9
|
Total current
assets
|
1,593.2
|
|
1,628.1
|
Property, plant and
equipment, net
|
2,167.6
|
|
2,156.5
|
Operating lease
right-of-use assets, net
|
1,402.8
|
|
1,410.1
|
Goodwill and intangible
assets, net
|
3,493.5
|
|
3,494.2
|
Other assets,
net
|
434.9
|
|
431.7
|
Total
assets
|
$
9,092.0
|
|
$
9,120.6
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
410.5
|
|
$
480.5
|
Accrued employee
compensation and benefits
|
118.1
|
|
113.1
|
Asset-based credit
facilities
|
52.2
|
|
54.7
|
Operating lease
liabilities, short-term
|
86.7
|
|
86.4
|
Construction
advances
|
61.8
|
|
59.3
|
Deferred
revenue
|
106.7
|
|
110.9
|
Other current
liabilities
|
39.0
|
|
42.7
|
Total current
liabilities
|
875.0
|
|
947.6
|
Long-term debt,
net
|
1,519.2
|
|
1,518.2
|
Operating lease
liabilities, long-term
|
1,430.7
|
|
1,433.4
|
Deemed landlord
financing obligations
|
1,013.7
|
|
980.0
|
Deferred taxes,
net
|
41.9
|
|
36.7
|
Other long-term
liabilities
|
324.5
|
|
326.5
|
Total shareholders'
equity
|
3,887.0
|
|
3,878.2
|
Total liabilities and
shareholders' equity
|
$
9,092.0
|
|
$
9,120.6
|
TOPGOLF CALLAWAY
BRANDS CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except
per share data)
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
Net
revenues:
|
|
|
|
Products
|
$
726.1
|
|
$
767.6
|
Services
|
418.1
|
|
399.8
|
Total net
revenues
|
1,144.2
|
|
1,167.4
|
Costs and
expenses:
|
|
|
|
Cost of
products
|
412.9
|
|
442.0
|
Cost of services,
excluding depreciation and amortization
|
41.6
|
|
44.4
|
Other venue
expense
|
323.4
|
|
305.5
|
Selling, general and
administrative expense
|
273.0
|
|
268.5
|
Research and
development expense
|
23.2
|
|
22.8
|
Venue pre-opening
costs
|
3.2
|
|
3.7
|
Total costs and
expenses
|
1,077.3
|
|
1,086.9
|
Income from
operations
|
66.9
|
|
80.5
|
Interest expense,
net
|
(58.8)
|
|
(49.6)
|
Other income (expense),
net
|
3.4
|
|
(10.1)
|
Income before
taxes
|
11.5
|
|
20.8
|
Income tax provision
(benefit)
|
5.0
|
|
(4.2)
|
Net income
|
$
6.5
|
|
$
25.0
|
|
|
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
0.04
|
|
$
0.13
|
Diluted
|
$
0.04
|
|
$
0.13
|
Weighted-average common
shares outstanding:
|
|
|
|
Basic
|
183.7
|
|
185.2
|
Diluted
|
184.4
|
|
201.5
|
TOPGOLF CALLAWAY
BRANDS CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
(In
millions)
(Unaudited)
|
|
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
6.5
|
|
$
25.0
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
Depreciation and amortization
|
65.4
|
|
56.1
|
Non-cash
interest on financing and deemed landlord financed
leases
|
13.1
|
|
9.0
|
Amortization of debt discount and issuance costs
|
1.5
|
|
2.1
|
Deferred
taxes, net
|
5.4
|
|
(3.7)
|
Share-based
compensation
|
13.1
|
|
12.4
|
Loss on disposal of
long-lived assets
|
0.9
|
|
—
|
Unrealized net (gains)
losses on hedging instruments and foreign currency
|
(2.8)
|
|
3.1
|
Loss on
debt modification
|
4.7
|
|
10.5
|
Changes in assets and
liabilities, net of impacts from business combinations
|
(181.1)
|
|
(266.6)
|
Net cash used in
operating activities
|
(73.3)
|
|
(152.1)
|
|
|
|
|
Cash flows from
investing activities, net of impacts of business
combinations:
|
|
|
|
Capital
expenditures
|
(65.4)
|
|
(121.4)
|
Asset acquisitions,
net of cash acquired
|
—
|
|
(18.4)
|
Business combinations,
net of cash acquired
|
(23.3)
|
|
—
|
Investment in
golf-related ventures
|
(0.3)
|
|
—
|
Acquisition of
intangible assets
|
(0.2)
|
|
(0.5)
|
Proceeds from sale of
property and equipment
|
0.1
|
|
0.4
|
Net cash used in
investing activities
|
(89.1)
|
|
(139.9)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings on long-term debt
|
—
|
|
1,224.8
|
Repayments of
long-term debt and DLF obligations
|
(12.0)
|
|
(775.8)
|
Repayments of credit
facilities, net
|
—
|
|
(219.4)
|
Debt issuance
costs
|
(0.2)
|
|
(1.2)
|
Repayments of
financing leases
|
(1.5)
|
|
(1.0)
|
Proceeds from lease
financing
|
27.2
|
|
51.6
|
Exercise of stock
options
|
—
|
|
3.6
|
Acquisition of
treasury stock
|
(6.2)
|
|
(9.2)
|
Net cash provided by
financing activities
|
7.3
|
|
273.4
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(4.4)
|
|
0.6
|
Net decrease in cash,
cash equivalents and restricted cash
|
(159.5)
|
|
(18.0)
|
Cash, cash equivalents
and restricted cash at beginning of period
|
398.8
|
|
203.3
|
Cash, cash equivalents
and restricted cash at end of period
|
239.3
|
|
185.3
|
Less: restricted
cash(1)
|
(5.4)
|
|
(4.7)
|
Cash and cash
equivalents at end of period
|
$
233.9
|
|
$
180.6
|
|
(1)
|
Includes $0.7 million
and $0.5 million of short-term restricted cash and $4.7 million and
$4.2 million of long-term restricted cash included in other assets
for the periods ended March 31, 2024 and 2023,
respectively.
|
TOPGOLF CALLAWAY
BRANDS CORP.
CONSOLIDATED NET
REVENUES AND OPERATING SEGMENT INFORMATION
(In
millions)
(Unaudited)
|
|
|
Net Revenues by
Category
|
|
Three Months
Ended
March
31,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs.
2023(1)
|
|
2024
|
|
2023
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
Venues
|
$
405.7
|
|
$
386.7
|
|
$
19.0
|
|
4.9 %
|
|
4.8 %
|
Topgolf other business
lines
|
17.1
|
|
16.8
|
|
0.3
|
|
1.8 %
|
|
1.2 %
|
Golf Clubs
|
345.9
|
|
350.8
|
|
(4.9)
|
|
(1.4 %)
|
|
0.1 %
|
Golf Balls
|
104.0
|
|
92.9
|
|
11.1
|
|
11.9 %
|
|
12.4 %
|
Apparel
|
159.6
|
|
176.1
|
|
(16.5)
|
|
(9.4 %)
|
|
(8.1 %)
|
Gear, Accessories
& Other
|
111.9
|
|
144.1
|
|
(32.2)
|
|
(22.3 %)
|
|
(22.0 %)
|
Total net
revenues
|
$
1,144.2
|
|
$
1,167.4
|
|
$
(23.2)
|
|
(2.0 %)
|
|
(1.3 %)
|
|
|
|
|
|
|
|
|
|
|
(1)
See "Additional Information and
Disclosures—Non-GAAP Information" for the calculation methodology
of constant currency measures.
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues by
Region
|
|
Three Months
Ended
March
31,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs. 2023(1)
|
|
2024
|
|
2023
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
United
States
|
$
829.0
|
|
$
811.1
|
|
$
17.9
|
|
2.2 %
|
|
2.2 %
|
Europe
|
141.4
|
|
153.6
|
|
(12.2)
|
|
(7.9 %)
|
|
(10.2 %)
|
Asia
|
127.6
|
|
160.2
|
|
(32.6)
|
|
(20.3 %)
|
|
(13.6 %)
|
Rest of
world
|
46.2
|
|
42.5
|
|
3.7
|
|
8.7 %
|
|
9.9 %
|
Total net
revenues
|
$
1,144.2
|
|
$
1,167.4
|
|
$
(23.2)
|
|
(2.0 %)
|
|
(1.3 %)
|
|
|
|
|
|
|
|
|
|
|
(1)
See "Additional Information and
Disclosures—Non-GAAP Information" for the calculation methodology
of constant currency measures.
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
Three Months
Ended
March
31,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs. 2023(1)
|
|
2024
|
|
2023
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
422.8
|
|
$
403.5
|
|
$
19.3
|
|
4.8 %
|
|
4.6 %
|
Golf
Equipment
|
449.9
|
|
443.7
|
|
6.2
|
|
1.4 %
|
|
2.7 %
|
Active
Lifestyle
|
271.5
|
|
320.2
|
|
(48.7)
|
|
(15.2 %)
|
|
(14.4 %)
|
Total net
revenues
|
$
1,144.2
|
|
$
1,167.4
|
|
$
(23.2)
|
|
(2.0 %)
|
|
(1.3 %)
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
2.9
|
|
$
2.8
|
|
$
0.1
|
|
3.6 %
|
|
|
Golf
Equipment
|
82.1
|
|
81.6
|
|
0.5
|
|
0.6 %
|
|
|
Active
Lifestyle
|
24.7
|
|
37.3
|
|
(12.6)
|
|
(33.8 %)
|
|
|
Total segment operating
income
|
109.7
|
|
121.7
|
|
(12.0)
|
|
(9.9 %)
|
|
|
Corporate G&A and
other(2)
|
(42.8)
|
|
(41.2)
|
|
(1.6)
|
|
3.9 %
|
|
|
Total operating
income
|
66.9
|
|
80.5
|
|
(13.6)
|
|
(16.9 %)
|
|
|
Interest expense,
net
|
(58.8)
|
|
(49.6)
|
|
(9.2)
|
|
18.5 %
|
|
|
Other income
(expense), net
|
3.4
|
|
(10.1)
|
|
13.5
|
|
(133.7 %)
|
|
|
Total income before
income taxes
|
$
11.5
|
|
$
20.8
|
|
$
(9.3)
|
|
(44.7 %)
|
|
|
|
(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
March 31,
|
|
2024
|
|
2023
|
|
GAAP
|
|
Non-Cash
Amortization
and
Depreciation(1)
|
|
Non-
Recurring
Items(2)
|
|
Tax
Valuation
Allowance
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-Cash
Amortization
and
Depreciation(1)
|
|
Non-
Recurring
Items(3)
|
|
Tax
Valuation
Allowance(4)
|
|
Non-
GAAP
|
Net revenues
|
$
1,144.2
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
1,144.2
|
|
$
1,167.4
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
1,167.4
|
Total costs and
expenses
|
1,077.3
|
|
4.7
|
|
2.8
|
|
—
|
|
1,069.8
|
|
1,086.9
|
|
7.3
|
|
3.2
|
|
—
|
|
1,076.4
|
Income from
operations
|
66.9
|
|
(4.7)
|
|
(2.8)
|
|
—
|
|
74.4
|
|
80.5
|
|
(7.3)
|
|
(3.2)
|
|
—
|
|
91.0
|
Other expense,
net
|
(55.4)
|
|
(0.1)
|
|
(4.7)
|
|
—
|
|
(50.6)
|
|
(59.7)
|
|
(0.6)
|
|
(10.7)
|
|
—
|
|
(48.4)
|
Income before income
taxes
|
11.5
|
|
(4.8)
|
|
(7.5)
|
|
—
|
|
23.8
|
|
20.8
|
|
(7.9)
|
|
(13.9)
|
|
—
|
|
42.6
|
Income tax provision
(benefit)
|
5.0
|
|
(1.2)
|
|
(1.8)
|
|
—
|
|
8.0
|
|
(4.2)
|
|
(1.9)
|
|
(3.4)
|
|
(8.3)
|
|
9.4
|
Net income
(loss)
|
$
6.5
|
|
$
(3.6)
|
|
$
(5.7)
|
|
$
—
|
|
$
15.8
|
|
$
25.0
|
|
$
(6.0)
|
|
$
(10.5)
|
|
$
8.3
|
|
$
33.2
|
Earnings per share -
diluted
|
$
0.04
|
|
$
(0.02)
|
|
$
(0.03)
|
|
$
—
|
|
$
0.09
|
|
$
0.13
|
|
$
(0.03)
|
|
$
(0.05)
|
|
$
0.04
|
|
$
0.17
|
Weighted-average shares
outstanding - diluted
|
184.4
|
|
184.4
|
|
184.4
|
|
184.4
|
|
184.4
|
|
201.5
|
|
201.5
|
|
201.5
|
|
201.5
|
|
201.5
|
|
(1)
Includes amortization and depreciation of acquired intangible
assets and purchase accounting adjustments related to
acquisitions.
|
(2) Primarily includes $5.7 million in total charges
related to our 2024 debt repricing in addition to IT costs related
to a 2023 cybersecurity incident and acquisition-related IT
integration and implementation costs.
|
(3)
Primarily includes $12.5 million in
total charges related to our 2023 debt refinancing and
acquisition-related IT integration and implementation
costs.
|
(4)
Release of tax valuation allowances recorded in connection with the
merger with Topgolf.
|
|
|
|
Twelve months ended
December 31,
|
|
2023
|
|
GAAP
|
|
Non-Cash
Amortization and
Depreciation(1)
|
|
Non-Recurring
Items(2)
|
|
Tax Valuation
Allowance(3)
|
|
Non-
GAAP
|
Net revenues
|
$
4,284.8
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
4,284.8
|
Total costs and
expenses
|
4,047.1
|
|
24.9
|
|
37.5
|
|
—
|
|
3,984.7
|
Income from
operations
|
237.7
|
|
(24.9)
|
|
(37.5)
|
|
—
|
|
300.1
|
Other expense,
net
|
(202.9)
|
|
(0.6)
|
|
(10.8)
|
|
—
|
|
(191.5)
|
Income before income
taxes
|
34.8
|
|
(25.5)
|
|
(48.3)
|
|
—
|
|
108.6
|
Income tax provision
(benefit)
|
(60.2)
|
|
(6.1)
|
|
(11.4)
|
|
(58.3)
|
|
15.6
|
Net income
(loss)
|
$
95.0
|
|
$
(19.4)
|
|
$
(36.9)
|
|
$
58.3
|
|
$
93.0
|
Earnings per share -
diluted
|
$
0.50
|
|
$
(0.10)
|
|
$
(0.18)
|
|
$
0.29
|
|
$
0.49
|
Weighted-average shares
outstanding - diluted
|
201.1
|
|
201.1
|
|
201.1
|
|
201.1
|
|
201.1
|
|
(1)
|
Includes amortization
and depreciation of acquired intangible assets and purchase
accounting adjustments related to acquisitions.
|
(2)
|
Primarily includes
$12.7 million in total charges related to the impairment and
abandonment of the Shankstars media game in the Topgolf segment,
$12.3 million of total reorganization costs in the Topgolf and
Active Lifestyle segments, $13.7 million in total charges related
to our 2023 debt modification, $4.2 million in IT integration and
implementation costs primarily related to the Topgolf merger, and
$2.4 million in costs related to a cybersecurity
incident.
|
(3)
|
Related to the release
of tax valuation allowances recorded in connection with the merger
with Topgolf.
|
TOPGOLF CALLAWAY BRANDS CORP.
SUPPLEMENTAL FINANCIAL INFORMATION AND NON-GAAP
RECONCILIATION
(In millions, except per share
data)
(Unaudited)
|
|
|
2024 Trailing Twelve Month Adjusted
EBITDA
|
|
2023 Trailing Twelve Month Adjusted
EBITDA
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
March
31,
|
|
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
March
31,
|
|
|
|
|
2023
|
|
2023
|
|
2023
|
|
2024
|
|
Total
|
|
2022
|
|
2022
|
|
2022
|
|
2023
|
|
Total
|
|
Net income
(loss)
|
$
117.4
|
|
$
29.7
|
|
$
(77.1)
|
|
$
6.5
|
|
$
76.5
|
|
$
105.4
|
|
$
38.5
|
|
$
(72.7)
|
|
$
25.0
|
|
$
96.2
|
|
Interest expense,
net
|
51.7
|
|
52.3
|
|
56.6
|
|
58.8
|
|
219.4
|
|
32.5
|
|
36.4
|
|
42.5
|
|
49.6
|
|
161.0
|
|
Income tax (benefit)
provision
|
(45.8)
|
|
(3.0)
|
|
(7.2)
|
|
5.0
|
|
(51.0)
|
|
2.9
|
|
0.3
|
|
(3.5)
|
|
(4.2)
|
|
(4.5)
|
|
Non-cash depreciation
and amortization expense
|
58.6
|
|
61.0
|
|
64.0
|
|
65.4
|
|
249.0
|
|
48.9
|
|
48.4
|
|
53.0
|
|
56.1
|
|
206.4
|
|
Non-cash stock
compensation and stock warrant expense, net
|
12.3
|
|
13.2
|
|
8.4
|
|
14.2
|
|
48.1
|
|
11.6
|
|
10.3
|
|
9.7
|
|
12.5
|
|
44.1
|
|
Non-cash lease
amortization expense
|
4.4
|
|
4.5
|
|
4.4
|
|
3.5
|
|
16.8
|
|
6.6
|
|
4.4
|
|
4.5
|
|
4.6
|
|
20.1
|
|
Non-recurring items,
before taxes(1)
|
7.6
|
|
5.6
|
|
20.7
|
|
7.5
|
|
41.4
|
|
(0.6)
|
|
6.1
|
|
3.1
|
|
13.7
|
|
22.3
|
|
Adjusted
EBITDA
|
$
206.2
|
|
$
163.3
|
|
$
69.8
|
|
$
160.9
|
|
$ 600.2
|
|
$
207.3
|
|
$
144.4
|
|
$
36.6
|
|
$
157.3
|
|
$ 545.6
|
|
|
|
(1)
|
In 2024, amounts
include charges related to the 2024 debt repricing, IT costs
related to a 2023 cybersecurity incident, and IT integration and
implementation costs stemming primarily from the merger with
Topgolf. In 2023, amounts include charges related to the impairment
and abandonment of the Shankstars media game, charges in connection
with the 2023 debt refinancing, IT integration and implementation
costs stemming primarily from the merger with Topgolf,
restructuring and reorganization charges in our Topgolf and Active
Lifestyle segments, and costs related to a cybersecurity
incident.
|
|
|
Reconciliation of
Consolidated Non-GAAP Adjusted Free Cash Flow
|
Three Months Ended
March 31
|
|
2024
|
|
2023
|
GAAP cash flows used in
operations (1)
|
$
(73.3)
|
|
$
(152.1)
|
Less: capital
expenditures (1)
|
(65.4)
|
|
(121.4)
|
Add: proceeds from
lease financing(1)
|
27.2
|
|
51.6
|
Consolidated
Non-GAAP Adjusted Free Cash Flow
|
$
(111.5)
|
|
$
(221.9)
|
|
(1)
Source: Condensed consolidated statement
of cash flows within the Company's quarterly report on Form
10-Q.
|
TOPGOLF CALLAWAY BRANDS CORP.
SUPPLEMENTAL FINANCIAL INFORMATION AND NON-GAAP
RECONCILIATION
(In millions, except per share
data)
(Unaudited)
|
|
Reconciliation of
Topgolf Adjusted Segment EBITDA
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
|
|
|
Topgolf Segment
operating income(1):
|
$
2.9
|
|
$
2.8
|
Non-GAAP depreciation
and amortization expense
|
48.5
|
|
36.6
|
Non-Cash stock
compensation expense
|
5.2
|
|
4.1
|
Non-cash lease
amortization expense
|
3.2
|
|
4.5
|
Other expense,
net
|
—
|
|
0.1
|
Topgolf Adjusted
Segment EBITDA
|
$
59.8
|
|
$
48.1
|
|
|
(1)
|
We do not calculate
GAAP net income at the operating segment level, but have provided
Topgolf's segment income from operations as a relevant measurement
of profitability. Segment income from operations does not include
interest expense and taxes as well as other non-cash and
non-recurring items. Segment operating income is reconciled to the
Company's consolidated pre-tax income in the Segment Results
section of this release.
|
|
|
Reconciliation of
Topgolf Adjusted Segment EBITDA
|
Twelve
Months Ended
December 31,
|
|
2023
|
|
|
Topgolf Segment
operating income(1):
|
$
108.8
|
Non-GAAP depreciation
and amortization expense
|
164.9
|
Non-cash stock
compensation expense
|
12.9
|
Non-cash lease
amortization expense
|
17.1
|
Other expense,
net
|
0.6
|
Topgolf Adjusted
Segment EBITDA
|
$
304.3
|
|
|
(1)
|
We do not calculate
GAAP net income at the operating segment level, but have
provided Topgolf's segment income from operations as a
relevant measurement of profitability. Segment income from
operations does not include interest expense and taxes as well as
other non-cash and non-recurring items. Segment operating income is
reconciled to the Company's consolidated pre-tax income in the
Segment Results section of this release.
|
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SOURCE Topgolf Callaway Brands Corp.