Financial Performance - Q4 2025 net sales were $367.5 million, a decrease of 1.1% year-over-year, while full year net sales were $2,060.1 million, down 0.8% compared to 2024[4][11] - Q4 2025 adjusted EBITDA was negative $25.1 million, a decrease of $29.5 million from the prior year, primarily due to $12 million in incremental tariff expenses and a $19 million increase in annual incentive compensation[10][14] - Full year net income from continuing operations was $38.8 million on a GAAP basis, a decrease of 58.5% compared to 2024[14] - Total segment operating income for Q4 2025 was $(21.8) million, a decrease of $28.0 million compared to Q4 2024, which reported $6.2 million[17] - For the full year 2025, total segment operating income was $257.9 million, down $25.3 million from $283.2 million in 2024[17] - Operating loss for Q4 2025 was $54.1 million, compared to a loss of $24.6 million in Q4 2024, representing a 119.9% increase in losses[39] - Net income from continuing operations for the twelve months ended December 31, 2025, was $38.8 million, down from $93.4 million in 2024[40] - Total operating income for the twelve months ended December 31, 2025, was $128.1 million, a decrease of 16.2% from $152.9 million in 2024[40] - Net loss from continuing operations was $0.5 million for 2025, compared to a net income of $93.4 million in 2024[45] - Diluted earnings per share from continuing operations for 2025 were $0.21, compared to $0.50 in 2024[45] Revenue Guidance and Projections - The company initiated 2026 revenue guidance of $1.98 billion to $2.05 billion and adjusted EBITDA guidance of $170 million to $195 million[3] - The company expects consolidated net sales for 2026 to be between $1.98 billion and $2.05 billion, compared to $2.06 billion reported in 2025[20] - Adjusted EBITDA from continuing operations for 2026 is estimated to be between $170 million and $195 million, down from $222 million in 2025[20] - For Q1 2026, consolidated net sales are projected to be between $635 million and $665 million, compared to $630 million in Q1 2025[21] Cash Position and Debt Management - Callaway Golf Company returned to a pure play golf equipment company after selling Jack Wolfskin and a 60% stake in Topgolf, resulting in a net cash position of approximately $680 million and gross debt of about $480 million[2][3] - The company plans to utilize its cash position to pay off convertible debt and initiate a $200 million share repurchase program[2][3] - The company had approximately $680 million in unrestricted cash and cash equivalents as of January 2, 2026, following a $1 billion partial repayment of its term loan[19] - The company plans to pay off $258 million of convertible notes upon maturity in May 2026[19] - Cash and cash equivalents increased to $903.2 million as of December 31, 2025, from $445.0 million in 2024[33] - Long-term debt decreased significantly to $650.7 million in 2025 from $1,414.3 million in 2024[33] - The company aims to maintain a net cash to zero net leverage position throughout 2026[19] Segment Performance - Golf Equipment segment net sales for Q4 2025 were $213.9 million, down 4.9% year-over-year, while Apparel, Gear and Other segment sales increased by 4.8% to $153.6 million[15] - Golf Clubs sales declined by 7.1% to $166.1 million in Q4 2025 from $178.8 million in Q4 2024[37] - The Apparel, Gear, and Other segment saw a revenue increase of 4.8% in Q4 2025, reaching $153.6 million compared to $146.5 million in Q4 2024[39] Cost and Margin Analysis - Full year GAAP gross margin declined by approximately 60 basis points to 42.1%, impacted by $34 million in additional tariff expenses[12] - The company experienced a decline in gross margin due to a 340-basis point impact from incremental tariffs in Q4 2025[8] - Gross profit for the same period was $867.6 million, resulting in a gross margin of 42.1%, compared to 42.7% in 2024[45] - Total cost of sales for the twelve months ended December 31, 2025, was $1,192.5 million, compared to $1,190.7 million in 2024[45] Restructuring and Transformation Efforts - The company incurred $5.5 million in restructuring charges related to the Transformation Plan during the fiscal year 2025[45] - The company is undergoing restructuring and reorganization charges related to its Transformation Plan, impacting financial results[47] - IT integration costs associated with a new cloud-based HRM system were incurred, reflecting ongoing technological advancements[47] - The company is centralizing warehousing and distribution operations to achieve synergies from recent acquisitions[47] - Future outlook includes continued focus on restructuring efforts and integration of new technologies to enhance operational efficiency[47]

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Core Insights - Topgolf Callaway Brands Corp. (MODG) has shown significant improvement in its balance sheet by the end of Q3 2025, with enhanced liquidity and reduced leverage due to strong cash generation and the sale of the Jack Wolfskin business [1] Financial Performance - Available liquidity increased to $1.25 billion, up nearly $400 million year-over-year, supported by higher operating cash flow and proceeds from the Jack Wolfskin sale [2] - Net debt decreased to $2.23 billion from $2.54 billion year-over-year, resulting in a reduction of net leverage to 3.8x from 4.6x [3] - REIT-adjusted leverage improved significantly to 1.4x from 2.4x, indicating reduced strain on the balance sheet [3][8] Future Outlook - Despite ongoing external pressures, particularly tariff-related cost headwinds expected to persist into 2026, the company’s stronger liquidity and lower leverage provide a more stable foundation for evaluating strategic alternatives for the Topgolf business [4] Market Performance - MODG shares have increased by 53.4% over the past six months, outperforming the industry average of 4.2% [5] - The company is currently trading at a forward 12-month price-to-sales (P/S) ratio of 0.65, which is lower compared to industry peers like Acushnet Holdings (P/S of 1.97) and American Outdoor Brands (P/S of 0.56) [9]

Company Overview - Topgolf Callaway Brands is a global leader in golf equipment, lifestyle apparel, and technology-enabled entertainment venues, combining a diversified product portfolio with experiential offerings [1] - The company integrates retail, digital, and venue-based revenue streams, positioning itself competitively in both consumer products and leisure entertainment sectors [1] Stock Performance - As of Friday, MODG shares were priced at $13.44, reflecting a 55% increase over the past year, significantly outperforming the S&P 500's approximately 17% gain during the same period [2] Investment Activity - O'Keefe Stevens Advisory increased its position in Topgolf Callaway Brands by 821,039 shares during the fourth quarter, with an estimated transaction value of $8.66 million [3][4] - The fund's quarter-end stake rose to 1.17 million shares, with the position value increasing by $10.33 million from the previous filing [3] Financial Performance - In the third quarter, Topgolf reported a nearly $15 million loss, but revenue from ongoing business grew by 3% year over year, with both net revenue and adjusted EBITDA exceeding guidance [6] - Same venue sales at Topgolf returned to positive growth, indicating a key inflection point after several challenging quarters [6] - Liquidity improved to $1.25 billion, up $391 million from a year earlier, and management raised full-year 2025 guidance, now expecting total revenue of $3.90 billion to $3.94 billion and adjusted EBITDA of $490 million to $510 million [6] Investor Sentiment - The recent investment activity indicates confidence among investors that the business mix is improving, with a focus on execution rather than merely chasing momentum [5][7]

Core Insights - Tapasya Fund achieved a net return of 23.5% in 2025, outperforming the S&P 500's return of 17.9% [1] - The fund's performance was bolstered by the theme of Artificial Intelligence (AI), which helped the market reach over 38 new all-time highs in 2025 [1] - The fund aims to avoid sector-specific bubble bursts to mitigate the impact of general market downturns on its portfolio [1] Company Insights - Topgolf Callaway Brands Corp. (NYSE:MODG) experienced a one-month return of 19.12% and a 52-week gain of 60.90% [2] - As of January 8, 2026, Topgolf Callaway Brands Corp. had a market capitalization of $2.497 billion, with shares closing at $13.58 [2] - The investment in Topgolf Callaway Brands Corp. was deemed a mistake by Tapasya Fund due to management's failure to execute a planned split, resulting in losses, although the small position size minimized overall portfolio impact [3] Hedge Fund Insights - Topgolf Callaway Brands Corp. was held by 34 hedge fund portfolios at the end of Q3 2025, an increase from 28 in the previous quarter [4] - Despite recognizing the potential of Topgolf Callaway Brands Corp., the company believes that certain AI stocks present greater upside potential and lower downside risk [4]

Core Insights - Shares of Topgolf Callaway Brands Corp. (MODG) have surged 45.1% compared to the industry and S&P 500's growth of 1.1% and 3.4% respectively [1] - The company reported better-than-expected results in Q3 2025, driven by a rebound in Topgolf traffic and positive same-venue sales [2] Performance Highlights - Topgolf's same-venue sales turned positive, with high-teens traffic growth in the core 1-2 bay segment due to value-driven initiatives [7][8] - The Golf Equipment segment also showed strong performance, with revenue growth despite fewer major product launches [9] - Overall, Topgolf Callaway's shares have outperformed other companies in the sector, such as Acushnet Holdings Corp. (GOLF) and American Outdoor Brands, Inc. (AOUT), which gained 6.1% and 2% respectively [3] Factors Supporting Growth - Management emphasized a return to positive same-venue sales and strong execution in the Golf Equipment segment, which contributed to the operational turnaround [7][10] - The company raised its full-year revenue and EBITDA guidance, indicating confidence in sustained traffic trends and cost controls [11] - Improved balance sheet metrics, including reduced net leverage and strengthened free cash flow, further supported investor confidence [11] Valuation Metrics - MODG is currently trading at a forward 12-month price-to-sales (P/S) ratio of 0.62, which is lower than industry peers like Acushnet Holdings and American Outdoor, trading at P/S ratios of 1.96 and 0.52 respectively [12] Earnings Estimates - The Zacks Consensus Estimate for MODG's 2026 loss has narrowed in the past 60 days, indicating improving expectations [15] Conclusion - Topgolf Callaway presents an attractive investment opportunity as its core business shows demand recovery, supported by strong brand performance in the Golf Equipment segment and disciplined cost management [16]

Core Insights - Topgolf Callaway Brands Corp. (MODG) is expanding the rollout of the Toast point-of-sale (POS) system to enhance operational efficiency as venue traffic improves [1][4] - The implementation of Toast has led to faster service and better labor efficiency, contributing to increased spending per visit [1][2] - The rollout is expected to continue through 2026, with full implementation targeted by the end of Q2 2026 [1][4] Operational Efficiency - The POS upgrade is facilitating more effective operations during peak visitation periods, improving service execution and supporting increased traffic from recent value initiatives [2] - Management emphasizes the importance of operational efficiency to maintain venue performance as traffic volumes rise [2] Guest Experience Initiatives - Toast will support initiatives aimed at simplifying the guest experience, including pay-at-bay and mobile food ordering, which will be piloted in Q4 2025 [3] - These features are designed to streamline ordering and payment processes, potentially increasing food and beverage spending per visit [3] Standardization and Scalability - The broader goal of the POS transition is to create a standardized and scalable operating model across Topgolf venues [4] - Early productivity benefits from the rollout suggest that technology will play a crucial role in stabilizing venue-level economics as adoption expands [4] Price Performance and Valuation - MODG shares have increased by 48.8% over the past six months, contrasting with a 1% decline in the industry [5] - The company is currently trading at a forward 12-month price-to-sales (P/S) ratio of 0.6, which is lower than industry peers like Acushnet Holdings (1.91) and American Outdoor Brands (0.51) [8] Earnings Estimates - The Zacks Consensus Estimate for MODG's 2026 loss has narrowed over the past 60 days, indicating potential improvements in financial outlook [10]

Core Insights - The Zacks Leisure and Recreation Products industry is experiencing growth due to increased health and fitness awareness, leading to solid demand for fitness products and outdoor recreation items [1][5]. Industry Overview - The industry includes companies that provide a range of recreational products and services, such as amusement products, swimming pools, marine products, and outdoor equipment. Economic growth, a healthy labor market, and rising disposable income drive consumer demand [2]. Trends Influencing the Industry - The U.S. golf business is in a growth cycle, with increased participation and engagement across various age groups. Off-course experiences are attracting younger consumers, broadening the sport's appeal [3]. - Higher play frequency among golfers is leading to increased demand for upgraded equipment, while innovations in fitting and data analytics are enhancing spending per participant [4]. - There is robust demand for fitness-related products, with consumers investing in home workout equipment and digital fitness platforms, driven by a focus on personal well-being [5]. - Technology is redefining engagement in the industry, with smart fitness equipment and app-enabled products enhancing customer experiences and extending lifetime value [6]. Industry Performance - The Zacks Leisure and Recreation Products industry holds a Zacks Industry Rank of 110, placing it in the top 45% of over 244 Zacks industries, indicating positive near-term prospects [7][8]. - Despite the positive outlook, the industry has underperformed the S&P 500, with a collective decline of 2.2% over the past year compared to the S&P 500's rise of 18.3% [10]. Valuation Metrics - The industry trades at a forward price-to-earnings ratio of 21.4X, which is lower than the S&P 500's 23.11X and the sector's 18.45X. The industry has seen a range from 13.25X to 37.40X over the past five years, with a median of 20.67X [13]. Notable Companies - **Topgolf Callaway**: The company has seen a resurgence in traffic and sales, particularly in its core customer segment, with a Zacks Rank of 1 (Strong Buy) [14]. The stock has increased by 48.9% in the past six months [15]. - **Amer Sports**: Benefiting from strong demand for premium brands, particularly in footwear, with a Zacks Rank of 2 (Buy). The company expects a 22% year-over-year growth in earnings per share [19][20]. - **Acushnet Holdings**: Strong global golf participation and demand for Titleist products are driving growth, with a projected 7.1% increase in earnings for 2026 [23][24]. - **Pool Corporation**: Expected to benefit from steady maintenance demand and digital enhancements, with a forecasted 6.6% increase in earnings for 2026 [27][28].

Core Insights - Callaway Golf has announced the launch of its new Chrome Family of golf balls, which includes Chrome Tour, Chrome Tour X, and Chrome Soft, set to be available at retail on January 30, 2026 [1][5] Product Features - The new lineup features a revolutionary Tour Fast Mantle with a 16% higher flex modulus, designed to increase ball speed by acting like a stiffer spring at impact, marking the first use of this material in a golf ball [2] - The advanced core/layer system in the new golf balls is faster than previous materials used in Callaway designs, enhancing overall performance [2][3] - The Seamless Tour Aero with an Optimized Hybrid Aero Pattern provides improved distance and flight consistency, while a high-performance Tour Urethane cover offers exceptional feel and greenside control [3] Target Audience - Chrome Tour is aimed at players seeking incredible speed and distance off the tee with a mid-spin profile for optimal distance and control [4] - Chrome Tour X targets players looking for maximum speed off the tee and a mid-high spin profile for enhanced workability [4] - Chrome Soft is designed for players wanting the benefits of a Tour ball with increased launch and a lower full shot profile for longer distance and soft feel [4] Pricing and Availability - The new Chrome Family golf balls will be available at a price of $57.99 per dozen starting January 30, 2026 [5]

Core Viewpoint - The company has successfully completed the sale of a 60% stake in its Topgolf and Toptracer businesses for approximately $1.1 billion, which will enhance its financial position and allow for strategic initiatives such as debt repayment and stock repurchase [1][5]. Group 1: Financial Transactions - The company received approximately $800 million in cash proceeds from the sale, net of working capital adjustments and transaction expenses [1]. - Following the sale, the company repaid $1 billion of outstanding borrowings under its term loan B facility [2]. - After the repayment, the company has approximately $480 million in outstanding debt and $680 million in unrestricted cash and cash equivalents [3]. Group 2: Stock Repurchase Program - The company's Board of Directors has authorized a new stock repurchase program of up to $200 million, which will be executed based on market conditions and other factors [4]. - The repurchase program replaces any unused portion of the prior stock repurchase program and does not require the company to acquire a specific number of shares [4]. Group 3: Corporate Changes - The company plans to change its corporate name back to "Callaway Golf Company" and will change its ticker symbol to "CALY" effective on or about January 16, 2026 [5].