Core Insights - Topgolf is enhancing the football season experience with new games and food offerings, aiming to create memorable moments for players and fans [1][2] Group 1: New Game Introduction - The Topgolf Field Goal Challenge is a new game that tests players' swings and aims, featuring two play modes: Free Play and The Challenge [2] - In Free Play, players can choose from five different distances, while The Challenge mode allows each player 10 shots to score five balls through digital goal posts [2][3] Group 2: Venue Experience - Topgolf has 51 locations nationwide equipped with real field goal posts for an immersive experience [3] - The company offers various game day packages, including a Tailgate Package for two side-by-side bays with food and drinks, available starting September 2 [6] Group 3: Food and Beverage Offerings - Topgolf is introducing a customizable food and drink bundle called the Pepsi® Kickoff Combo, priced between $24.99 and $29.99 [4] - New menu items include Touchdown Dill Dip ($9.79-$10.99), Kickin' Popper Dip ($10.79-$12.49), Buffalo Chicken Potato Skins ($11.29-$12.99), Swicy Peach Pork Sliders ($13.99-$15.79), and Fiesta Nachos ($11.99-$13.99) [4] Group 4: Pricing and Promotions - Sunday Funday pricing during the football season ranges from $30 to $40 per hour, translating to $5 to $7 per person, depending on the venue [6] - Additional promotions include Half-Off Golf from Monday to Thursday [6] Group 5: Company Overview - Topgolf is a brand under Topgolf Callaway Brands Corp. (NYSE: MODG), which operates over 100 venues globally and utilizes Toptracer technology [6][8] - The company focuses on creating a tech-driven, inclusive golf experience that caters to both on-course and off-course activities [8]

Core Insights - The company reported better-than-expected earnings, leading to an 8.8% increase in shares, with investors optimistic about the upcoming spinoff of Topgolf, despite potential delays due to the resignation of the unit's CEO [1][8] Financial Performance - In Q2, revenue slightly declined by 4.1% to $1.11 billion, with adjusted earnings per share down 45.2% to $0.24, but both figures exceeded analyst expectations [2] - The core golf equipment business experienced a minor decline of 1.4%, while Topgolf's revenue was down only 1.2%, attributed to effective price cuts that improved customer traffic [2][3] Management Commentary - CEO Chip Brewer highlighted consumer strength in the golf equipment sector, cost-saving initiatives, and successful value strategies at Topgolf that enhanced traffic and sales trends [3] - Management raised the full-year guidance for Topgolf's revenue decline from a range of 6% to 12% to a narrower range of 6% to 9%, and also increased the low end of the adjusted EBITDA range [4] Spinoff Plans - The company is pursuing a spinoff of 80% of the Topgolf segment, which could optimize capital structures and unlock value, although the spinoff is now expected to be delayed until early 2026 due to the CEO's resignation [7][8] - Despite recent stock rallies, Topgolf remains approximately 75% below its 2021 highs, indicating potential for value recovery if consumer demand stabilizes and the spinoff is successful [6][8]

Core Insights - Topgolf Callaway Brands reported Q2 2025 results with non-GAAP diluted EPS of $0.24, significantly exceeding the $0.02 analyst estimate, while GAAP revenue was $1,110.5 million, surpassing forecasts despite a 4.1% year-over-year decline [1][2] Financial Performance - Non-GAAP diluted EPS decreased by 45.2% from Q2 2024, while GAAP revenue fell 4.1% year-over-year [2] - Non-GAAP net income was $45.6 million, down 45.1% from $83.1 million in Q2 2024 [2] - Adjusted EBITDA declined by 4.8% to $195.8 million compared to $205.6 million in Q2 2024 [2] - Topgolf segment revenue was $485.3 million, a 1.8% decrease from $494.4 million in Q2 2024 [2] Business Segments Overview - The company operates three main segments: Topgolf, Golf Equipment, and Active Lifestyle, with Topgolf venues combining food, drinks, and technology-driven experiences [3] - The Golf Equipment segment includes Callaway, a leader in golf clubs and balls, while the Active Lifestyle segment focuses on apparel and accessories [3] Strategic Developments - A strategic separation is planned to split Topgolf from its Golf Equipment and Active Lifestyle businesses, with a potential spin-off in 2026 [4] - The company aims to enhance Topgolf venue traffic and margins while adapting to global tariff impacts and executing cost-saving projects [4] Quarterly Review - GAAP revenue declined 4.1% year-over-year, primarily due to lower sales in the Active Lifestyle segment and the divestiture of Jack Wolfskin [5] - Same venue sales at Topgolf decreased by 6%, although new promotions helped improve attendance [5][10] - The Golf Equipment segment saw a slight revenue decrease of 0.5%, but operating income remained stable due to cost reductions [6] Operating Income and Liquidity - Total segment operating income increased by 2.7% to $152.2 million, reflecting improved margin focus [7] - GAAP net income dropped 67.3% to $20.3 million, influenced by one-time charges related to the Jack Wolfskin sale [7][8] - Liquidity improved significantly to $1.16 billion, bolstered by the Jack Wolfskin sale proceeds [9] Future Guidance - For FY2025, the company expects consolidated net revenue of $3.80 to $3.92 billion and adjusted EBITDA of $430 million to $490 million [12] - Topgolf revenues are projected to reach $1.71 billion to $1.77 billion, with adjusted EBITDA for the segment estimated at $265 million to $295 million [12] - Guidance for Q3 indicates lower consolidated net revenue and adjusted EBITDA compared to FY2024 due to the absence of Jack Wolfskin's contribution [13]

Core Insights - Topgolf Callaway Brands reported $1.11 billion in revenue for the quarter ended June 2025, reflecting a year-over-year decline of 4.1% and an EPS of $0.24 compared to $0.42 a year ago, with a revenue surprise of +2.69% over the Zacks Consensus Estimate of $1.08 billion and an EPS surprise of +700% over the consensus estimate of $0.03 [1] Revenue Performance - Topgolf segment generated net revenues of $485.3 million, exceeding the three-analyst average estimate of $462.06 million, but showing a year-over-year decline of -1.8% [4] - Active Lifestyle segment reported net revenues of $213.6 million, below the three-analyst average estimate of $222.17 million, with a year-over-year decline of -14.4% [4] - Golf Equipment segment achieved net revenues of $411.6 million, slightly above the average estimate of $405.65 million, with a year-over-year change of -0.5% [4] - Services segment reported net revenues of $481.4 million, surpassing the two-analyst average estimate of $458.45 million, with a year-over-year decline of -1.6% [4] - Products segment generated net revenues of $629.1 million, slightly below the two-analyst average estimate of $636.17 million, reflecting a year-over-year decline of -5.9% [4] Operating Income - Topgolf segment reported operating income of $55.4 million, significantly exceeding the three-analyst average estimate of $25.03 million [4] - Active Lifestyle segment achieved operating income of $20.5 million, surpassing the two-analyst average estimate of $9.55 million [4] - Golf Equipment segment reported operating income of $76.3 million, exceeding the average estimate of $64.45 million from two analysts [4] Stock Performance - Shares of Topgolf Callaway have returned +2.9% over the past month, outperforming the Zacks S&P 500 composite's +0.5% change, with a current Zacks Rank of 3 (Hold), indicating potential performance in line with the broader market [3]

Financial Data and Key Metrics Changes - Consolidated revenues for Q2 2025 were $1,110 million, representing a 4% year-over-year decrease, primarily due to decreased revenue in the Active Lifestyle segment [29] - Q2 adjusted EBITDA was $196 million, a 5% year-over-year decrease, mainly due to decreased revenue and incremental tariffs [30] - The company raised its full-year revenue guidance to a range of $3,800 million to $3,920 million, reflecting an increase of over $30 million at the midpoint compared to prior guidance [35] Business Line Data and Key Metrics Changes - Golf equipment revenue for Q2 was approximately flat year-over-year at $412 million, exceeding expectations [30] - Active Lifestyle segment revenue decreased by $36 million year-over-year to $214 million, primarily due to the sale of Jack Wolfskin and soft market conditions [31] - Topgolf Q2 revenue decreased by 2% year-over-year, primarily due to a 6% decline in same venue sales, partially offset by higher revenue from new venues [32] Market Data and Key Metrics Changes - Market conditions in the U.S. for golf equipment remain healthy, with rounds played approximately flat on a playable hour adjusted basis [8] - Conditions in the UK and Northern Europe markets are strong, while Asia and Central Europe are softer year-over-year [9] - The athleisure category in the Active Lifestyle segment is down mid to high single digits during Q2 [11] Company Strategy and Development Direction - The company closed the sale of Jack Wolfskin, enabling greater business focus and financial flexibility for Topgolf [4] - The company is committed to ongoing cost reduction and margin improvement initiatives, which have been beneficial in the current operating environment [6] - The strategic process for Topgolf is ongoing, with both a spin and sale being evaluated, although a spin is now impractical for the second half of the year [15][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the golf equipment segment, citing healthy consumer engagement and upcoming product launches [10] - The company is optimistic about the improving trends in same venue sales at Topgolf, driven by value initiatives and enhanced customer experience [12][39] - Management acknowledged the challenges posed by tariffs, increasing the estimated impact from $25 million to $40 million for the year [5][45] Other Important Information - The company reported an increase in available liquidity to $1,160 million as of June 30, 2025, primarily due to cash proceeds from the sale of Jack Wolfskin [32] - Net debt decreased to $2,390 million, down from $2,620 million year-over-year, reflecting improved cash balances [33] - The company expects to be free cash flow positive at both the total company and Topgolf in 2025 [38] Q&A Session Summary Question: Can you talk about the robust process regarding the spin and sale of Topgolf? - Management confirmed that the strategic direction remains unchanged, with only the timing of a potential spin being affected due to leadership changes [42][80] Question: What is the current health of the golf industry and drivers of the improving golf equipment business? - Management noted that the golf equipment business remains healthy, with consumer engagement strong and sell-through up low single digits [49] Question: What were the biggest contributors to the value initiatives at Topgolf? - Management highlighted the success of the Sunday Fun Pass and other value offerings, which significantly increased traffic and improved customer perception [57] Question: Can you provide an update on cost reduction efforts and labor efficiency initiatives? - Management indicated that teams have executed well on cost reduction, with improvements in labor efficiency and service speed contributing to stable margins [66] Question: How is the TravisMathew business trending? - Management reported that while the athleisure market is down, the women's category within TravisMathew continues to perform well [72]

PART I. [FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part provides the unaudited condensed consolidated financial information for the company, including statements, notes, and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements of Topgolf Callaway Brands Corp. for the periods ended June 30, 2025, including balance sheets, statements of operations, comprehensive income, cash flows, and shareholders' equity, along with detailed notes explaining significant accounting policies, divestitures, revenue recognition, leases, financing, earnings per share, goodwill, investments, income taxes, commitments, share-based compensation, fair value measurements, derivatives, accumulated other comprehensive loss, segment information, and restructuring costs [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | ASSETS (in millions) | June 30, 2025 | December 31, 2024 | Change | | :------------------- | :------------ | :---------------- | :----- | | Cash and cash equivalents | $683.5 | $445.0 | +$238.5 | | Accounts receivable, net | $338.0 | $175.7 | +$162.3 | | Inventories | $608.9 | $757.3 | -$148.4 | | Total current assets | $1,881.3 | $1,600.7 | +$280.6 | | Property, plant and equipment, net | $2,224.4 | $2,219.0 | +$5.4 | | Trade names and trademarks | $1,110.6 | $1,303.9 | -$193.3 | | Goodwill | $619.9 | $620.2 | -$0.3 | | Total assets | $7,607.3 | $7,636.1 | -$28.8 | | LIABILITIES & EQUITY (in millions) | June 30, 2025 | December 31, 2024 | Change | | :------------------- | :------------ | :---------------- | :----- | | Accounts payable and accrued expenses | $379.2 | $451.3 | -$72.1 | | Convertible notes, net | $257.0 | $— | +$257.0 | | Total current liabilities | $1,015.7 | $825.9 | +$189.8 | | Long-term debt, net | $1,195.1 | $1,457.9 | -$262.8 | | Total liabilities and shareholders' equity | $7,607.3 | $7,636.1 | -$28.8 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the company's financial performance, including revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions, except per share data) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :--------------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | Total net revenues | $1,110.5 | $1,157.8 | -$47.3 (-4.1%) | $2,202.8 | $2,302.0 | -$99.2 (-4.3%) | | Total costs and expenses | $1,004.7 | $1,054.8 | -$50.1 (-4.7%) | $2,030.5 | $2,132.1 | -$101.6 (-4.8%) | | Income from operations | $105.8 | $103.0 | +$2.8 (+2.7%) | $172.3 | $169.9 | +$2.4 (+1.4%) | | Interest expense, net | $(58.7) | $(57.0) | -$1.7 (+3.0%) | $(116.7) | $(115.8) | -$0.9 (+0.8%) | | Other (expense) income, net | $(13.0) | $6.4 | -$19.4 (-303.1%) | $(9.9) | $9.8 | -$19.7 (-201.0%) | | Income before income taxes | $34.1 | $52.4 | -$18.3 (-34.9%) | $45.7 | $63.9 | -$18.2 (-28.5%) | | Income tax provision (benefit) | $13.8 | $(9.7) | +$23.5 | $23.3 | $(4.7) | +$28.0 | | Net income | $20.3 | $62.1 | -$41.8 (-67.3%) | $22.4 | $68.6 | -$46.2 (-67.3%) | | Basic EPS | $0.11 | $0.34 | -$0.23 | $0.12 | $0.37 | -$0.25 | | Diluted EPS | $0.11 | $0.32 | -$0.21 | $0.12 | $0.36 | -$0.24 | [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's comprehensive income, including net income and other comprehensive income components for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | Net income | $20.3 | $62.1 | -$41.8 | $22.4 | $68.6 | -$46.2 | | Other comprehensive income: | | | | | | | | Change in derivative instruments | $(6.4) | $0.5 | -$6.9 | $(15.2) | $10.5 | -$25.7 | | Cumulative foreign currency translation adjustments recognized from dissolution of foreign subsidiary | $13.8 | $3.4 | +$10.4 | $13.8 | $3.4 | +$10.4 | | Foreign currency translation adjustments | $27.2 | $(3.5) | +$30.7 | $45.4 | $(17.7) | +$63.1 | | Comprehensive income, before income tax | $54.9 | $62.5 | -$7.6 | $66.4 | $64.8 | +$1.6 | | Income tax provision (benefit) on derivative instruments | $0.4 | $(2.1) | +$2.5 | $(3.3) | $(1.7) | -$1.6 | | Comprehensive income | $54.5 | $64.6 | -$10.1 | $69.7 | $66.5 | +$3.2 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, 2025 vs. 2024) | (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------- | | Net cash provided by operating activities | $41.7 | $151.4 | -$109.7 | | Net cash provided by (used in) investing activities | $140.3 | $(174.0) | +$314.3 | | Net cash provided by (used in) financing activities | $43.8 | $(52.3) | +$96.1 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $233.5 | $(81.7) | +$315.2 | | Cash, cash equivalents and restricted cash at end of period | $683.8 | $317.1 | +$366.7 | [Condensed Consolidated Statements of Shareholders' Equity](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section details changes in the company's shareholders' equity, including common stock, additional paid-in capital, and accumulated deficit from December 31, 2024, to June 30, 2025 Condensed Consolidated Statements of Shareholders' Equity (December 31, 2024 to June 30, 2025) | (in millions) | Balance at Dec 31, 2024 | Acquisition of treasury stock | Compensatory awards released from restriction | Share-based compensation | Equity adjustment from foreign currency translation | Change in fair value of derivative instruments, net of tax | Impact from dissolution of foreign subsidiaries | Net income | Balance at June 30, 2025 | | :------------------------------------------ | :---------------------- | :-------------------------- | :------------------------------------------ | :----------------------- | :------------------------------------------ | :------------------------------------------------------- | :------------------------------------------ | :--------- | :----------------------- | | Common Stock | $1.9 | — | — | — | — | — | — | — | $1.9 | | Additional Paid-in Capital | $3,032.8 | — | $(19.5) | $14.0 | — | — | — | — | $3,027.3 | | Accumulated Deficit | $(500.2) | — | — | — | — | — | — | $22.4 | $(477.8) | | Accumulated Other Comprehensive Loss | $(76.0) | — | — | — | $45.4 | $(11.9) | $13.8 | — | $(28.7) | | Treasury Stock | $(50.8) | $(3.3) | $19.5 | — | — | — | — | — | $(34.6) | | Total Shareholders' Equity | $2,407.7 | $(3.3) | — | $14.0 | $45.4 | $(11.9) | $13.8 | $22.4 | $2,488.1 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides explanatory notes to the condensed consolidated financial statements, detailing accounting policies, significant transactions, and financial instrument disclosures [Note 1. The Company and Basis of Presentation](index=13&type=section&id=Note%201.%20The%20Company%20and%20Basis%20of%20Presentation) This note describes Topgolf Callaway Brands Corp.'s business segments, its strategic intent to separate into two independent companies, and the recent divestiture of the Jack Wolfskin business - Topgolf Callaway Brands Corp. is a leading modern golf and active lifestyle company, operating through three segments: Topgolf (golf entertainment, Toptracer), Golf Equipment (Callaway Golf, Odyssey), and Active Lifestyle (Callaway, TravisMathew, OGIO)[27](index=27&type=chunk)[28](index=28&type=chunk) - The Board of Directors intends to pursue a separation of the business into two independent companies: Callaway (golf equipment and active lifestyle) and Topgolf (venue-based golf entertainment), likely in **2026** after a new CEO is in place[29](index=29&type=chunk)[137](index=137&type=chunk) - On May 31, 2025, the Company completed the sale of the Jack Wolfskin business for net proceeds of **$290.0 million** in cash[30](index=30&type=chunk)[37](index=37&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=14&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies used in preparing the financial statements and discusses the evaluation of recently issued accounting standards - The financial statements are prepared in accordance with GAAP and SEC rules, with certain information condensed or omitted compared to annual reports, and interim results are not indicative of full-year performance[31](index=31&type=chunk) - The Company is evaluating the impact of recently issued accounting standards: ASU 2024-04 (Induced Conversions of Convertible Debt Instruments) effective for fiscal years beginning after December 15, 2025, and ASU 2024-03 (Disaggregation of Income Statement Expenses) effective for fiscal years beginning after December 15, 2026[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3. Divestitures](index=14&type=section&id=Note%203.%20Divestitures) This note details the completion of the Jack Wolfskin business sale, including the net proceeds received and the pre-tax loss recognized from the divestiture - The sale of the Jack Wolfskin business was completed on May 31, 2025, for **$290.0 million** in cash, net of cash retained and subject to adjustments[37](index=37&type=chunk) - A pre-tax loss of **$22.7 million** was recognized in connection with the divestiture, including a **$7.0 million** impairment loss upon classification as held for sale and an additional **$15.7 million** loss upon sale, primarily from reclassification of cumulative translation adjustments[38](index=38&type=chunk)[40](index=40&type=chunk) - The divestiture aligns with a strategic decision to increase focus and optimize resources in core businesses, with Jack Wolfskin's operating results included in the Active Lifestyle segment until the sale date[39](index=39&type=chunk) [Note 4. Revenue Recognition](index=16&type=section&id=Note%204.%20Revenue%20Recognition) This note provides a breakdown of total net revenues by segment and major geographic region, along with licensing, royalty, and other income for the reported periods Total Net Revenues by Segment (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :---------------- | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | Topgolf | $485.3 | $494.4 | -$9.1 (-1.8%) | $879.0 | $917.2 | -$38.2 (-4.2%) | | Golf Equipment | $411.6 | $413.8 | -$2.2 (-0.5%) | $855.3 | $863.7 | -$8.4 (-1.0%) | | Active Lifestyle | $213.6 | $249.6 | -$36.0 (-14.4%) | $468.5 | $521.1 | -$52.6 (-10.1%) | | Total Consolidated | $1,110.5 | $1,157.8 | -$47.3 (-4.1%) | $2,202.8 | $2,302.0 | -$99.2 (-4.3%) | Revenue by Major Geographic Region (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :-------------- | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | United States | $862.2 | $891.3 | -$29.1 (-3.3%) | $1,652.6 | $1,720.3 | -$67.7 (-3.9%) | | Europe | $105.3 | $114.1 | -$8.8 (-7.7%) | $235.4 | $255.5 | -$20.1 (-7.9%) | | Asia | $99.8 | $109.1 | -$9.3 (-8.5%) | $228.6 | $236.7 | -$8.1 (-3.4%) | | Rest of World | $43.2 | $43.3 | -$0.1 (-0.2%) | $86.2 | $89.5 | -$3.3 (-3.7%) | | Total Consolidated | $1,110.5 | $1,157.8 | -$47.3 (-4.1%) | $2,202.8 | $2,302.0 | -$99.2 (-4.3%) | Licensing, Royalty and Other Income (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :---------------- | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | Topgolf | $16.4 | $13.8 | +$2.6 (+18.8%) | $29.9 | $26.5 | +$3.4 (+12.8%) | | Active Lifestyle | $9.0 | $8.5 | +$0.5 (+5.9%) | $16.1 | $14.6 | +$1.5 (+10.3%) | | Total | $25.4 | $22.3 | +$3.1 (+13.9%) | $46.0 | $41.1 | +$4.9 (+11.9%) | [Note 5. Leases](index=18&type=section&id=Note%205.%20Leases) This note discusses the company's lease arrangements, including a gain on lease termination, future lease obligations, and a breakdown of total lease costs - The Company recognized a **$12.0 million** gain on lease termination in Q1 2025 from an agreement with its Japanese subsidiary's landlord[53](index=53&type=chunk) - As of June 30, 2025, minimum capital commitment for leases under construction was approximately **$46.0 million**, with **$603.5 million** of future lease obligations for five signed but uncommenced venues[54](index=54&type=chunk) Total Lease Costs (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :---------------- | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | Operating lease costs | $40.9 | $45.4 | -$4.5 (-9.9%) | $86.0 | $90.5 | -$4.5 (-5.0%) | | Total financing lease costs | $6.7 | $5.7 | +$1.0 (+17.5%) | $13.4 | $11.9 | +$1.5 (+12.6%) | | Total DLF obligation costs | $39.3 | $34.2 | +$5.1 (+14.9%) | $78.3 | $67.2 | +$11.1 (+16.5%) | | Variable lease costs | $2.0 | $2.9 | -$0.9 (-31.0%) | $4.4 | $6.4 | -$2.0 (-31.3%) | | Total lease costs | $88.9 | $88.2 | +$0.7 (+0.8%) | $182.1 | $176.0 | +$6.1 (+3.5%) | [Note 6. Financing Arrangements](index=22&type=section&id=Note%206.%20Financing%20Arrangements) This note details the company's short-term credit facilities, long-term debt, and overall consolidated available liquidity as of June 30, 2025 Short-Term Credit Facilities (June 30, 2025 vs. December 31, 2024) | (in millions) | Maturity Date | Interest Rate | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------ | :-------------- | :---------------- | | 2023 ABL Credit Facility | March 16, 2028 | 5.81% | $— | $— | | 2025 Japan ABL Credit Facility | January 21, 2028 | 1.40% | $48.6 | $— | | 2022 Japan ABL Credit Facility | January 25, 2025 | 1.21% | $— | $25.4 | | Total Principal Amount | | | $48.6 | $25.4 | Long-Term Debt and Credit Facilities (June 30, 2025 vs. December 31, 2024) | (in millions) | Maturity Date | Interest Rate | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------ | :-------------- | :---------------- | | 2023 Term Loan B | March 16, 2030 | 7.33% | $1,171.9 | $1,178.1 | | Convertible Notes | May 1, 2026 | 2.75% | $258.3 | $258.3 | | Equipment Notes | July 24, 2025 - Dec 21, 2027 | 2.36% - 5.93% | $8.8 | $11.7 | | Mortgage Loans | July 1, 2033 - July 29, 2036 | 9.75% - 11.31% | $43.9 | $44.3 | | Financed Tenant Improvements | February 1, 2035 | 8.00% - 10.00% | $3.8 | $3.1 | | Total Principal Amount | | | $1,486.7 | $1,495.5 | - Consolidated available liquidity was **$1,161.7 million** as of June 30, 2025, an increase of **$377.9 million** compared to June 30, 2024[64](index=64&type=chunk)[196](index=196&type=chunk) [Note 7. Earnings Per Common Share](index=24&type=section&id=Note%207.%20Earnings%20Per%20Common%20Share) This note presents the basic and diluted earnings per common share calculations for the three and six months ended June 30, 2025 and 2024, including anti-dilutive securities Basic and Diluted EPS (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions, except per share data) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income (basic) | $20.3 | $62.1 | $22.4 | $68.6 | | Weighted-average common shares outstanding—basic | 183.8 | 183.5 | 183.6 | 183.6 | | Basic EPS | $0.11 | $0.34 | $0.12 | $0.37 | | Net income (diluted) | $20.3 | $63.8 | $22.4 | $71.9 | | Weighted-average common shares outstanding—diluted | 185.1 | 199.6 | 184.3 | 199.4 | | Diluted EPS | $0.11 | $0.32 | $0.12 | $0.36 | - For the three and six months ended June 30, 2025, approximately **17.4 million** and **17.6 million** securities, respectively, were anti-dilutive and excluded from diluted EPS calculation[76](index=76&type=chunk) [Note 8. Goodwill and Intangible Assets](index=25&type=section&id=Note%208.%20Goodwill%20and%20Intangible%20Assets) This note outlines changes in goodwill by segment, accumulated impairment losses, and intangible asset amortization expense for the reported periods Changes in Goodwill by Segment (December 31, 2024 to June 30, 2025) | (in millions) | Golf Equipment | Active Lifestyle | Total | | :-------------------------- | :------------- | :--------------- | :---- | | Balance at December 31, 2024 | $530.3 | $89.9 | $620.2 | | Disposals (Jack Wolfskin) | — | $(1.5) | $(1.5) | | Foreign currency translation and other | $1.3 | $(0.1) | $1.2 | | Balance at June 30, 2025 | $531.6 | $88.3 | $619.9 | - Goodwill is net of accumulated impairment losses of **$1,352.4 million**, recorded prior to December 31, 2024, in the Topgolf segment[77](index=77&type=chunk) - Intangible asset amortization expense for the three and six months ended June 30, 2025, was **$1.8 million** and **$4.5 million**, respectively, primarily in SG&A[79](index=79&type=chunk) [Note 9. Investments](index=26&type=section&id=Note%209.%20Investments) This note details the company's equity investments in Full Swing Golf Holdings, LLC and The Range NYC, LLC, along with other miscellaneous equity investments - The Company holds investments in Full Swing Golf Holdings, LLC (**$9.3 million**) and The Range NYC, LLC (Five Iron Golf) (**$33.9 million**) as of June 30, 2025 and December 31, 2024, accounted for at cost less impairments and adjusted for observable fair value changes[81](index=81&type=chunk)[82](index=82&type=chunk) - Other miscellaneous equity investments totaled **$6.1 million** as of June 30, 2025, up from **$5.2 million** at December 31, 2024[83](index=83&type=chunk) [Note 10. Selected Financial Data](index=27&type=section&id=Note%2010.%20Selected%20Financial%20Data) This note provides detailed breakdowns of inventories and property, plant, and equipment, net, along with total depreciation expense for the reported periods Inventories (June 30, 2025 vs. December 31, 2024) | (in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Finished goods | $460.0 | $597.1 | | Work in process | $0.8 | $0.9 | | Raw materials | $140.7 | $152.0 | | Food and beverage | $7.4 | $7.3 | | Total inventories | $608.9 | $757.3 | Property, Plant and Equipment, Net (June 30, 2025 vs. December 31, 2024) | (in millions) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Land | $205.6 | $207.0 | | Buildings and leasehold improvements | $1,939.5 | $1,877.1 | | Machinery and equipment | $299.0 | $316.6 | | Furniture, computer hardware and equipment | $494.9 | $432.2 | | Internal-use software | $146.3 | $151.2 | | Production molds | $11.0 | $10.9 | | Construction-in-process | $147.2 | $102.5 | | Total property, plant, and equipment, gross | $3,243.5 | $3,097.5 | | Less: Accumulated depreciation | $1,019.1 | $878.5 | | Total property, plant, and equipment, net | $2,224.4 | $2,219.0 | - Total depreciation expense for the three and six months ended June 30, 2025, was **$66.0 million** and **$132.4 million**, respectively[85](index=85&type=chunk) [Note 11. Income Taxes](index=28&type=section&id=Note%2011.%20Income%20Taxes) This note presents the income tax provision, effective tax rate, and the gross liability for uncertain tax positions for the three and six months ended June 30, 2025 and 2024 Income Tax Provision and Effective Tax Rate (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions, except percentages) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income tax provision (benefit) | $13.8 | $(9.7) | $23.3 | $(4.7) | | Effective tax rate | 40.6% | (18.5)% | 51.0% | (7.4)% | - The increase in the effective tax rate for **2025** was primarily due to changes in forecasted book income, the mix of domestic and foreign earnings, and the impact of the Jack Wolfskin sale[88](index=88&type=chunk)[89](index=89&type=chunk) - As of June 30, 2025, the gross liability for uncertain tax positions was **$25.9 million**, with **$14.1 million** potentially benefiting financial statements if favorably settled[90](index=90&type=chunk) [Note 12. Commitments & Contingencies](index=29&type=section&id=Note%2012.%20Commitments%20%26%20Contingencies) This note discusses the company's routine legal claims and investigations, minimum future commitments, and capital commitments for Topgolf venues under construction - The Company is subject to routine legal claims and investigations, including intellectual property infringement claims, but historically these have not had a material adverse effect[93](index=93&type=chunk)[94](index=94&type=chunk) Minimum Future Commitments (as of June 30, 2025) | (in millions) | Remainder of 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :-------------------------- | :---------------- | :--- | :--- | :--- | :--- | :--------- | :---- | | Minimum obligation | $48.2 | $48.4 | $24.4 | $10.3 | $1.5 | $6.5 | $139.3 | - Minimum capital commitment for Topgolf venues under construction (**$46.0 million**) is not included in the table above[96](index=96&type=chunk) [Note 13. Share-Based Compensation](index=30&type=section&id=Note%2013.%20Share-Based%20Compensation) This note provides details on share-based awards granted, including restricted stock units and performance-based awards, and the associated share-based compensation expense Share-Based Awards Granted (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions, except per share data) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Restricted stock units (Shares) | 0.2 | 0.1 | 2.4 | 1.1 | | Restricted stock units (Avg. grant date fair value per share) | $6.48 | $15.32 | $6.20 | $13.53 | | Performance based restricted share unit awards (Shares) | — | — | 1.7 | 1.0 | | Performance based restricted share unit awards (Avg. grant date fair value per share) | — | — | $8.57 | $19.01 | | Total Shares Granted | 0.2 | 0.1 | 4.1 | 2.1 | Share-Based Compensation Expense (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Share-based compensation expense, before tax | $7.0 | $7.0 | $14.0 | $21.2 | | Income tax benefit | $(1.7) | $(1.7) | $(3.4) | $(5.1) | | Share-based compensation expense, after tax | $5.3 | $5.3 | $10.6 | $16.1 | [Note 14. Fair Value of Financial Instruments](index=30&type=section&id=Note%2014.%20Fair%20Value%20of%20Financial%20Instruments) This note explains the company's fair value measurements for financial assets and liabilities using a three-level hierarchy and details the fair value of derivative instruments - The Company measures financial assets and liabilities at fair value using a three-level hierarchy, where cash, cash equivalents, and short-term liabilities are Level 1, and hedging instruments are Level 2[100](index=100&type=chunk)[101](index=101&type=chunk)[103](index=103&type=chunk) Fair Value of Derivative Instruments (June 30, 2025 vs. December 31, 2024) | (in millions) | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Foreign currency forward contracts—asset position | $1.5 | $5.7 | | Foreign currency forward contracts—liability position | $(9.5) | $(1.0) | | Interest rate hedge agreements—asset position | $1.8 | $7.8 | | Interest rate hedge agreements—liability position | $(1.8) | $— | | Total | $(8.0) | $12.5 | - During Q1 2025, a **$7.0 million** impairment loss was recorded for the Jack Wolfskin business classified as held-for-sale, and an additional **$15.7 million** loss on sale was recognized upon completion of the sale[106](index=106&type=chunk) [Note 15. Derivatives and Hedging](index=32&type=section&id=Note%2015.%20Derivatives%20and%20Hedging) This note describes the company's use of foreign currency forward contracts and interest rate swap contracts for hedging purposes and their fair value and notional amounts - The Company uses foreign currency forward contracts and interest rate swap contracts as designated cash flow hedges and non-designated hedges to manage exposure to foreign currency exchange rates and variable interest rates, not for speculative purposes[108](index=108&type=chunk)[109](index=109&type=chunk) Fair Value of Derivative Instruments (June 30, 2025 vs. December 31, 2024) | (in millions) | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Total asset position | $3.3 | $13.5 | | Total liability position | $11.3 | $1.0 | - Notional amounts for cash flow hedging foreign currency forward contracts were **$57.2 million** (June 30, 2025) and **$9.4 million** (December 31, 2024)[112](index=112&type=chunk) - Notional amount for interest rate swap contracts was **$400.0 million** for both periods[114](index=114&type=chunk) - For the three and six months ended June 30, 2025, net foreign currency transaction gains of **$14.7 million** and **$25.4 million**, respectively, were recognized in other income (expense), net[119](index=119&type=chunk) [Note 16. Accumulated Other Comprehensive Loss](index=35&type=section&id=Note%2016.%20Accumulated%20Other%20Comprehensive%20Loss) This note provides a reconciliation of accumulated other comprehensive loss, detailing changes related to derivative instruments and foreign currency translation adjustments Accumulated Other Comprehensive Loss Reconciliation (December 31, 2024 to June 30, 2025) | (in millions) | Derivative Instruments | Foreign Currency Translation | Total | | :------------------------------------------ | :--------------------- | :--------------------------- | :---- | | Balance at December 31, 2024 | $7.0 | $(83.0) | $(76.0) | | Change in derivative instruments | $(13.6) | — | $(13.6) | | Net losses reclassified to cost of products | $0.6 | — | $0.6 | | Net gains reclassified to interest expense | $(2.2) | — | $(2.2) | | Income tax impact on derivative instruments | $3.3 | — | $3.3 | | Cumulative foreign currency translation adjustments reclassified into other income upon dissolution of foreign subsidiary | — | $13.8 | $13.8 | | Foreign currency translation adjustments | — | $45.4 | $45.4 | | Balance at June 30, 2025 | $(4.9) | $(23.8) | $(28.7) | [Note 17. Segment Information](index=36&type=section&id=Note%2017.%20Segment%20Information) This note provides financial information by operating segment, including net revenues, operating income, and depreciation and amortization for Topgolf, Golf Equipment, and Active Lifestyle - The Company operates in three segments: Topgolf (golf entertainment, Toptracer), Golf Equipment (golf clubs, golf balls), and Active Lifestyle (apparel, gear, accessories, including Jack Wolfskin until its sale)[125](index=125&type=chunk) Segment Operating Income (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :---------------- | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | Topgolf | $55.4 | $56.1 | $(0.7) (-1.2%) | $43.5 | $59.0 | $(15.5) (-26.3%) | | Golf Equipment | $76.3 | $77.4 | $(1.1) (-1.4%) | $177.9 | $159.5 | +$18.4 (+11.5%) | | Active Lifestyle | $20.5 | $14.7 | +$5.8 (+39.5%) | $51.1 | $39.4 | +$11.7 (+29.7%) | | Total segment operating income | $152.2 | $148.2 | +$4.0 (+2.7%) | $272.5 | $257.9 | +$14.6 (+5.7%) | Total Depreciation and Amortization by Segment (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Topgolf | $54.2 | $52.5 | $109.2 | $104.9 | | Golf Equipment | $5.7 | $4.7 | $10.9 | $9.5 | | Active Lifestyle | $7.9 | $8.6 | $16.8 | $16.8 | | Total depreciation and amortization | $67.8 | $65.8 | $136.9 | $131.2 | [Note 18. Restructuring and Separation Costs](index=38&type=section&id=Note%2018.%20Restructuring%20and%20Separation%20Costs) This note details costs associated with the 2023 Restructuring Plan and the ongoing Transformation Plan for the Topgolf separation, including expected total costs - The **2023** Restructuring Plan, completed in December **2024**, aimed to improve organizational structure and operational efficiencies, with no costs incurred in Q2 **2025**[130](index=130&type=chunk) - The Transformation Plan, initiated in September **2024** for the Topgolf separation, incurred **$4.1 million** in Q2 **2025** and **$11.8 million** for the six months ended June 30, 2025, primarily for employee termination and PP&E disposals, with total costs expected to be **$20.0-$30.0 million**[132](index=132&type=chunk)[133](index=133&type=chunk) Separation Costs (Three and Six Months Ended June 30, 2025) | (in millions) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :---------------- | :--------------------------- | :--------------------------- | | Jack Wolfskin | $2.0 | $3.1 | | Topgolf | $4.5 | $7.1 | | Total Separation Costs | $6.5 | $10.2 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance and condition for the three and six months ended June 30, 2025, discussing net revenues, operating segment results, economic conditions, and liquidity. It also includes reconciliations of GAAP to non-GAAP measures and details on the planned separation of Topgolf and the divestiture of Jack Wolfskin [Intent to Separate into Two Independent Companies](index=40&type=section&id=Intent%20to%20Separate%20into%20Two%20Independent%20Companies) This section outlines the company's plan to separate into Callaway and Topgolf, aiming to enhance strategic focus and maximize shareholder value, with a spin-off likely in 2026 - The Company plans to separate into two independent entities: Callaway (golf equipment and active lifestyle) and Topgolf (venue-based golf entertainment), aiming to maximize shareholder value through enhanced strategic focus and optimized capital allocation[137](index=137&type=chunk)[138](index=138&type=chunk) - The spin-off is most likely to occur in **2026**, contingent on market conditions, regulatory approvals, and a new CEO for Topgolf[137](index=137&type=chunk) [Sale of Jack Wolfskin](index=40&type=section&id=Sale%20of%20Jack%20Wolfskin) This section confirms the completion of the Jack Wolfskin business sale on May 31, 2025, for **$290.0 million** in cash, adjusted for net working capital - The sale of the Jack Wolfskin business was completed on May 31, 2025, for **$290.0 million** in cash, adjusted for net working capital[139](index=139&type=chunk) [Discussion of Non-GAAP Measures](index=40&type=section&id=Discussion%20of%20Non-GAAP%20Measures) This section defines the non-GAAP financial measures used by the company, including constant currency net revenues and adjusted net income, and explains their purpose for decision-making and investor evaluation - Non-GAAP measures include constant currency net revenues, net income and diluted EPS excluding non-cash amortization of acquired intangibles, and net income and diluted EPS excluding certain non-cash and non-recurring charges[140](index=140&type=chunk) - These non-GAAP measures are used for financial and operational decision-making and to evaluate underlying business performance, providing additional useful information for investors[141](index=141&type=chunk) [Operating Segments and Seasonality](index=41&type=section&id=Operating%20Segments%20and%20Seasonality) This section describes the seasonal revenue patterns for the Topgolf, Golf Equipment, and Active Lifestyle segments, influenced by new venue openings, product launches, and consumer demand - Topgolf segment revenues are seasonally higher in Q2 and Q3 due to spring/summer, with Q1 being the lowest, and revenue growth is driven by new venue openings and same venue sales[145](index=145&type=chunk)[146](index=146&type=chunk) - Golf Equipment sales are seasonal, with new product launches in Q1 and initial sell-in continuing into Q2, leading to most profitability in the first half of the year[148](index=148&type=chunk) - Active Lifestyle sales for Callaway Golf apparel follow golf equipment seasonality, while TravisMathew products are more evenly spread throughout the year due to their lifestyle focus, and Jack Wolfskin sales were historically concentrated in fall/winter[149](index=149&type=chunk)[150](index=150&type=chunk) [Current Economic Conditions](index=42&type=section&id=Current%20Economic%20Conditions) This section discusses the impact of macroeconomic factors like inflation, high interest rates, tariffs, and foreign currency fluctuations on the company's demand, costs, and financial results - Demand for products and services, considered non-essential, is impacted by macroeconomic factors like sustained inflation and high interest rates, which put downward pressure on consumer and corporate discretionary spending[152](index=152&type=chunk) - Increased tariffs and uncertainty regarding tariff levels may raise costs for products, components, and raw materials, potentially leading to price increases or decreased customer demand[153](index=153&type=chunk) - Foreign currency fluctuations significantly impact financial results; a weaker U.S. dollar is positive, while a stronger U.S. dollar is negative, with a favorable impact of **$8.6 million** on international net revenues for Q2 2025, but an unfavorable impact of **$0.3 million** for the six months ended June 30, 2025[154](index=154&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) This section analyzes the company's net revenues, segment operating income, costs and expenses, interest expense, and other income for the three and six months ended June 30, 2025 and 2024 Net Revenues and Segment Operating Income (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions, except percentages) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :--------------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | Total net revenues | $1,110.5 | $1,157.8 | -$47.3 (-4.1%) | $2,202.8 | $2,302.0 | -$99.2 (-4.3%) | | Topgolf Net Revenues | $485.3 | $494.4 | -$9.1 (-1.8%) | $879.0 | $917.2 | -$38.2 (-4.2%) | | Golf Equipment Net Revenues | $411.6 | $413.8 | -$2.2 (-0.5%) | $855.3 | $863.7 | -$8.4 (-1.0%) | | Active Lifestyle Net Revenues | $213.6 | $249.6 | -$36.0 (-14.4%) | $468.5 | $521.1 | -$52.6 (-10.1%) | | Topgolf Segment Operating Income | $55.4 | $56.1 | -$0.7 (-1.2%) | $43.5 | $59.0 | -$15.5 (-26.3%) | | Golf Equipment Segment Operating Income | $76.3 | $77.4 | -$1.1 (-1.4%) | $177.9 | $159.5 | +$18.4 (+11.5%) | | Active Lifestyle Segment Operating Income | $20.5 | $14.7 | +$5.8 (+39.5%) | $51.1 | $39.4 | +$11.7 (+29.7%) | | Total operating income | $105.8 | $103.0 | +$2.8 (+2.7%) | $172.3 | $169.9 | +$2.4 (+1.4%) | - Topgolf net revenues decreased due to lower same venue sales from walk-ins, reservations, and a weaker events business, partially offset by new venue openings, and segment operating income also decreased[159](index=159&type=chunk)[160](index=160&type=chunk) - Golf Equipment net revenues decreased due to competitive launch timing, and segment operating income decreased in Q2 2025 due to lower revenue, tariffs, and unfavorable foreign currency, but increased for the six months due to higher gross margins, favorable pricing/product mix, cost savings, and a lease termination incentive[161](index=161&type=chunk)[162](index=162&type=chunk) - Active Lifestyle net revenues decreased primarily due to the Jack Wolfskin sale and soft market conditions, while segment operating income increased due to reduced operating expenses from the Jack Wolfskin sale and operational leverage improvements from cost reduction efforts[163](index=163&type=chunk)[164](index=164&type=chunk) Costs and Expenses (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions, except percentages) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :--------------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | Cost of products | $354.5 | $375.4 | -$20.9 (-5.6%) | $740.2 | $788.3 | -$48.1 (-6.1%) | | Cost of services, excluding depreciation and amortization | $50.4 | $50.7 | -$0.3 (-0.6%) | $89.5 | $92.3 | -$2.8 (-3.0%) | | Other venue expense | $336.4 | $339.4 | -$3.0 (-0.9%) | $657.6 | $662.8 | -$5.2 (-0.8%) | | Selling, general and administrative expense | $241.8 | $259.5 | -$17.7 (-6.8%) | $499.7 | $532.5 | -$32.8 (-6.2%) | | Research and development expense | $19.8 | $27.0 | -$7.2 (-26.7%) | $41.1 | $50.2 | -$9.1 (-18.1%) | | Venue pre-opening costs | $1.8 | $2.8 | -$1.0 (-35.7%) | $2.4 | $6.0 | -$3.6 (-60.0%) | | Total costs and expenses | $1,004.7 | $1,054.8 | -$50.1 (-4.7%) | $2,030.5 | $2,132.1 | -$101.6 (-4.8%) | - SG&A expenses decreased due to the Jack Wolfskin sale, cost reduction efforts in selling and marketing, a lease termination gain, and lower employee costs, partially offset by a loss on the Jack Wolfskin sale[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - Research and development expenses decreased due to the sale of the WGT business, reduced headcount from restructuring, and prior-year asset impairment charges related to the Shankstars game[180](index=180&type=chunk) - Venue pre-opening costs decreased due to fewer planned venue openings in **2025**[181](index=181&type=chunk) Other Income and Expenses (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions, except percentages) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (3M) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (6M) | | :--------------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | Interest expense, net | $(58.7) | $(57.0) | $(1.7) (+3.0%) | $(116.7) | $(115.8) | $(0.9) (+0.8%) | | Other income, net | $(13.0) | $6.4 | $(19.4) (n/m) | $(9.9) | $9.8 | $(19.7) (n/m) | - Other income, net, decreased significantly due to increased net losses on foreign currency transactions, the loss on the Jack Wolfskin sale, and non-recurrence of prior-year dividend income from Full Swing, partially offset by money market dividends[183](index=183&type=chunk)[184](index=184&type=chunk) Income Tax Provision and Effective Tax Rate (Three and Six Months Ended June 30, 2025 vs. 2024) | (in millions, except percentages) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income tax provision (benefit) | $13.8 | $(9.7) | $23.3 | $(4.7) | | Effective tax rate | 40.6% | (18.5)% | 51.0% | (7.4)% | [Net Income, Diluted Earnings Per Share and Reconciliation of Non-GAAP Measures](index=49&type=section&id=Net%20Income,%20Diluted%20Earnings%20Per%20Share%20and%20Reconciliation%20of%20Non-GAAP%20Measures) This section reconciles GAAP net income and diluted EPS to non-GAAP measures, explaining the key factors contributing to changes in profitability for the reported periods GAAP vs. Non-GAAP Net Income and Diluted EPS (Three Months Ended June 30, 2025 vs. 2024) | (in millions, except per share data) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | | GAAP Net Income | $20.3 | $62.1 | | Non-cash amortization of acquired intangibles | $(1.3) | $(2.2) | | Non-recurring items | $(24.0) | $(18.8) | | Non-GAAP Net Income | $45.6 | $83.1 | | GAAP Diluted EPS | $0.11 | $0.32 | | Non-GAAP Diluted EPS | $0.24 | $0.42 | - GAAP net income decreased by **$41.8 million** for Q2 2025, primarily due to increased income tax provision, loss on Jack Wolfskin sale, and foreign currency hedging losses, partially offset by Active Lifestyle segment operating income increase[187](index=187&type=chunk) GAAP vs. Non-GAAP Net Income and Diluted EPS (Six Months Ended June 30, 2025 vs. 2024) | (in millions, except per share data) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | | GAAP Net Income | $22.4 | $68.6 | | Non-cash amortization of acquired intangibles | $(3.5) | $(4.4) | | Non-recurring items | $(40.0) | $(24.5) | | Non-GAAP Net Income | $65.9 | $97.5 | | GAAP Diluted EPS | $0.12 | $0.36 | | Non-GAAP Diluted EPS | $0.35 | $0.51 | - GAAP net income decreased by **$46.2 million** for the six months ended June 30, 2025, mainly due to increased income tax provision, loss on Jack Wolfskin sale, Topgolf separation charges, and foreign currency hedging losses, partially offset by increased segment operating income in Golf Equipment and Active Lifestyle[189](index=189&type=chunk) [Financial Condition](index=50&type=section&id=Financial%20Condition) This section reviews the company's financial condition, focusing on changes in cash and cash equivalents, accounts receivable, and inventory as of June 30, 2025 - Cash and cash equivalents, including restricted cash, increased by **$233.5 million** to **$683.8 million** at June 30, 2025, primarily from investing activities (Jack Wolfskin sale proceeds), financing activities, and operating activities[191](index=191&type=chunk) - Consolidated net accounts receivable increased to **$338.0 million** at June 30, 2025, from **$175.7 million** at December 31, 2024, reflecting golf equipment sales seasonality[192](index=192&type=chunk) - Inventory decreased by **$148.4 million** to **$608.9 million** at June 30, 2025, compared to December 31, 2024, due to seasonality and the Jack Wolfskin sale[193](index=193&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's liquidity, including available cash, credit facilities, and operational cash flows, and details significant cash obligations and estimated capital expenditures - The Company believes existing cash, operational cash flows, and credit facilities are adequate to fund operations, capital expenditures, debt repayments, and contractual obligations for at least the next **12 months**[194](index=194&type=chunk) - As of June 30, 2025, total liquidity (cash + credit facility availability) was **$1,161.7 million**, an increase of **$377.9 million** YoY[196](index=196&type=chunk) Significant Cash Obligations (as of June 30, 2025) | (in millions) | Total | Remainder of 2025 | 2026 - 2027 | 2028 - 2029 | Thereafter | | :------------------------------------------ | :---- | :---------------- | :---------- | :---------- | :--------- | | Long-term debt | $1,486.7 | $9.1 | $292.0 | $27.7 | $1,157.9 | | Interest payments relating to long-term debt | $455.6 | $50.0 | $185.3 | $178.6 | $41.7 | | Finance leases, including imputed interest | $887.6 | $7.2 | $36.5 | $37.9 | $806.0 | | Operating leases, including imputed interest | $2,258.6 | $67.8 | $309.9 | $310.3 | $1,570.6 | | DLF obligations | $5,040.1 | $41.6 | $203.6 | $211.7 | $4,583.2 | | Minimum lease payments for leases signed but not yet commenced | $613.5 | $1.1 | $29.1 | $29.4 | $553.9 | | Capital commitments | $46.0 | $43.0 | $3.0 | $— | $— | | Unconditional purchase obligations | $129.3 | $48.2 | $71.2 | $9.9 | $— | | Uncertain tax contingencies | $9.6 | $0.3 | $0.5 | $0.1 | $8.7 | | Total | $10,927.0 | $268.3 | $1,131.1 | $805.6 | $8,722.0 | - Total estimated capital expenditures for FY2025 are approximately **$165.0 million**, with **$50.0 million** for core business and **$115.0 million** for Topgolf[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the Company's exposure to market risks, primarily from foreign currency exchange rates and interest rates, and its strategies using derivative financial instruments to mitigate these risks. It also includes a sensitivity analysis for potential losses from these exposures and addresses inflation risk [Foreign Currency Fluctuations](index=53&type=section&id=Foreign%20Currency%20Fluctuations) This section addresses the company's exposure to foreign currency exchange rate fluctuations and its use of forward contracts for mitigation, including a sensitivity analysis of potential losses - The Company uses foreign currency forward contracts to mitigate exposure to foreign currency exchange rate fluctuations[205](index=205&type=chunk)[206](index=206&type=chunk) - A sensitivity analysis estimates a potential loss of **$24.6 million** from foreign currency forward contracts at June 30, 2025, assuming a **10%** unfavorable movement in foreign currencies, which would be partially offset by underlying hedged transactions[207](index=207&type=chunk)[208](index=208&type=chunk) [Interest Rate Fluctuations](index=54&type=section&id=Interest%20Rate%20Fluctuations) This section discusses the company's interest rate risk from variable-rate debt, mitigation strategies using swap contracts, and a sensitivity analysis of incremental expense from rate increases - The Company is exposed to interest rate risk from variable-rate credit facilities and long-term debt, which is mitigated by interest rate swap contracts[210](index=210&type=chunk) - A sensitivity analysis indicates that a **10%** increase in interest rates would result in an incremental expense of **$3.7 million** over the **12-month** period ended June 30, 2025[210](index=210&type=chunk) [Inflation](index=54&type=section&id=Inflation) This section highlights the impact of sustained inflationary pressure on product and operating costs, noting the potential inability to fully offset these costs through price increases - Sustained inflationary pressure has increased product and operating costs, and the Company may not be able to fully offset these costs through price increases, potentially harming cash flows and operating results[211](index=211&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025, based on an evaluation by management, including the CEO and CFO. It also states that there were no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[212](index=212&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[213](index=213&type=chunk) PART II. [OTHER INFORMATION](index=55&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part presents additional information, including legal proceedings, risk factors, equity security sales, defaults, mine safety disclosures, other information, and a list of exhibits [Item 1. Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 "Commitments & Contingencies" for information on legal proceedings, indicating that the Company is subject to routine legal claims and investigations, which historically have not had a material adverse effect on its financial position or results of operations - Information on legal proceedings is incorporated by reference from Note 12, which states that routine legal claims and investigations have not historically had a material adverse effect[216](index=216&type=chunk)[94](index=94&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section states that there are no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and advises investors to consider these factors - No material changes to the risk factors from the Annual Report on Form 10-K for the year ended December 31, 2024[217](index=217&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activities, including the 2022 Repurchase Program and shares withheld for payroll tax obligations, with minimal repurchases in Q2 2025 - The Board of Directors authorized a **$100.0 million** share repurchase program in May **2022**, which remains in effect[218](index=218&type=chunk) Share Purchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Weighted Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Dollar Value that May Yet Be Purchased Under the Program | | :-------------------------- | :------------------------------- | :------------------------------------ | :----------------------------------------------------------- | :------------------------------------------------------------ | | April 1, 2025 - April 30, 2025 | — | $— | — | $35,528,182 | | May 1, 2025 - May 31, 2025 | 2,004 | $6.19 | — | $35,528,182 | | June 1, 2025 - June 30, 2025 | 7,477 | $6.25 | — | $35,528,182 | | Total | 9,481 | $6.24 | — | $35,528,182 | - During Q2 2025, the Company repurchased less than **0.1 million** shares for **$0.1 million**, related to shares withheld for payroll tax withholding obligations, not under the **2022** Repurchase Program[220](index=220&type=chunk) [Item 3. Defaults Upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reported period - No defaults upon senior securities were reported[221](index=221&type=chunk) [Item 4. Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that there were no mine safety disclosures during the reported period - No mine safety disclosures were reported[222](index=222&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) This section confirms that no officers or directors adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[223](index=223&type=chunk) [Item 6. Exhibits](index=57&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including agreements related to the Jack Wolfskin sale, credit facility amendments, certifications, and XBRL documents - The report includes a list of exhibits filed, such as the Sale & Purchase Agreement for Jack Wolfskin, amendments to credit facilities, certifications, and XBRL documents[226](index=226&type=chunk)

Q2 2025 Financial Performance - Consolidated Net Revenue for Q2 2025 reached $1.1 billion, a decrease of 4% compared to $1.1578 billion in Q2 2024[6, 11] - Adjusted EBITDA for Q2 2025 was $196 million, a 5% decrease from $205.6 million in Q2 2024[6, 11] - Net Income for Q2 2025 was $45.6 million, a 45% decrease compared to $83.1 million in Q2 2024[11] - Diluted Earnings Per Share for Q2 2025 were $0.24, a 45% decrease from $0.42 in Q2 2024[11] Guidance and Outlook - The company updated its total company guidance to exclude Jack Wolfskin and raised the full year 2025 financial outlook for its continuing business[9] - Updated 2025 revenue guidance excluding Jack Wolfskin to $3.86 billion, an increase of approximately $28 million in Core (Ex JW) revenue and $5 million in Topgolf revenue compared to prior guidance of $3.828 billion[17, 19] - Increased 2025 Adjusted EBITDA guidance midpoint to $460 million excluding Jack Wolfskin, an increase of approximately $31 million in Core (Ex JW) EBITDA and $10 million in Topgolf EBITDA compared to prior guidance of $434 million, offset by a $15 million impact from increased tariffs[23, 25] - Full year 2025 consolidated net revenue guidance is $3.80 - $3.92 billion, compared to prior guidance of $4.000 - $4.185 billion and FY24 results of $4.24 billion[26] - Full year 2025 consolidated Adjusted EBITDA guidance is $430 - $490 million, compared to prior guidance of $415 - $505 million and FY24 results of $588 million[26] Topgolf Performance - Topgolf same venue sales (SVS) decreased by 6% in Q2 2025 compared to Q2 2024, an improvement from the 12% decrease in Q1 2025[33, 36] - Topgolf same venue visits (SVV) increased by 6% in Q2 2025 compared to Q2 2024, a significant improvement from the 8% decrease in Q1 2025[36] - Full year 2025 Topgolf revenue guidance is $1.71 - $1.77 billion, compared to prior guidance of $1.680 - $1.790 billion and FY24 results of $1.81 billion[26]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) The company exceeded Q2 2025 expectations across all segments, driven by strong golf equipment demand and Topgolf initiatives, while strategically boosting liquidity through the Jack Wolfskin sale and raising full-year guidance for continuing businesses [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Overview) Topgolf Callaway Brands reported second-quarter 2025 financial results that met or exceeded expectations across all segments of its ongoing business, with consolidated revenue and Adjusted EBITDA surpassing forecasts - The Company **met or beat expectations** in all segments of its ongoing business[3](index=3&type=chunk) - Consolidated **revenue and Adjusted EBITDA surpassed expectations**[3](index=3&type=chunk) - Performance reflects **continued consumer strength in golf equipment**, benefits from gross margin and cost savings, and **successful Topgolf value initiatives**[3](index=3&type=chunk) [Key Strategic Developments](index=1&type=section&id=Key%20Strategic%20Developments) The company completed the sale of its Jack Wolfskin business, significantly boosting available liquidity by 48% year-over-year to over $1.1 billion, leading to updated guidance and an increased full-year outlook for continuing businesses - Completed the sale of Jack Wolfskin, strengthening available liquidity by **48% year-over-year to over $1.1 billion**[5](index=5&type=chunk) - Updated total Company guidance to exclude Jack Wolfskin and **raised full year 2025 financial outlook** for continuing businesses[5](index=5&type=chunk) [Consolidated Financial Performance](index=1&type=section&id=Consolidated%20Financial%20Performance) Q2 2025 consolidated net revenues decreased 4.1% to $1,110.5 million, primarily due to the Jack Wolfskin sale, while GAAP net income significantly declined, and non-GAAP operating income remained flat despite tariffs [GAAP Financial Results](index=1&type=section&id=GAAP%20Financial%20Results) For Q2 2025, consolidated net revenues decreased by 4.1% to $1,110.5 million, primarily due to the Jack Wolfskin sale, while net income saw a significant 67.3% decrease to $20.3 million, largely impacted by non-recurring charges and higher expenses Q2 2025 GAAP Consolidated Financial Results (YoY Change) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | $ Change (Millions) | % Change | | :----------------------------- | :----------------- | :----------------- | :------------------ | :------- | | Net revenues | $1,110.5 | $1,157.8 | $(47.3) | (4.1)% | | Income from operations | $105.8 | $103.0 | $2.8 | 2.7% | | Net income | $20.3 | $62.1 | $(41.8) | (67.3)% | | Earnings per share - diluted | $0.11 | $0.32 | $(0.21) | (65.6)% | - Net income decreased by **67.3%** primarily due to non-recurring charges from the Jack Wolfskin sale, increased foreign currency hedge losses, and higher income tax expense[10](index=10&type=chunk) [Non-GAAP Financial Results](index=2&type=section&id=Non-GAAP%20Financial%20Results) On a non-GAAP basis for Q2 2025, net revenues decreased by 4.1% to $1,110.5 million, non-GAAP income from operations remained approximately flat at $121.2 million despite new tariffs, and non-GAAP net income decreased by 45.1% to $45.6 million Q2 2025 Non-GAAP Consolidated Financial Results (YoY Change) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | $ Change (Millions) | % Change | | :--------------------------- | :----------------- | :----------------- | :------------------ | :------- | | Net revenues | $1,110.5 | $1,157.8 | $(47.3) | (4.1)% | | Non-GAAP income from operations | $121.2 | $121.8 | $(0.6) | (0.5)% | | Non-GAAP Net income | $45.6 | $83.1 | $(37.5) | (45.1)% | | Non-GAAP Earnings per share - diluted | $0.24 | $0.42 | $(0.19) | (45.2)% | | Non-GAAP Adjusted EBITDA | $195.8 | $205.6 | $(9.8) | (4.8)% | - Non-GAAP income from operations was **approximately flat** year over year, despite absorbing new tariffs[9](index=9&type=chunk) - Non-GAAP net income decreased primarily due to **increased foreign currency hedge losses and higher tax expense**[10](index=10&type=chunk) [Consolidated Results Commentary](index=2&type=section&id=Consolidated%20Results%20Commentary) The consolidated net revenue decline of 4.1% was primarily attributed to decreases in the Active Lifestyle segment due to the Jack Wolfskin sale, though overall results exceeded expectations driven by strong Topgolf and Golf Equipment performance - Net revenue decrease primarily due to **decreases in the Active Lifestyle segment** from the Jack Wolfskin business sale[8](index=8&type=chunk) - Consolidated results **exceeded expectations** due to stronger performance in Topgolf and Golf Equipment segments[8](index=8&type=chunk) - The Company absorbed new tariffs while achieving **approximately flat non-GAAP income from operations**[9](index=9&type=chunk) [Segment Performance Analysis](index=3&type=section&id=Segment%20Performance%20Analysis) Q2 2025 saw varied segment performance, with Active Lifestyle revenue declining due to the Jack Wolfskin sale, while total segment operating income increased, driven by Active Lifestyle's improved profitability [Segment Net Revenues](index=3&type=section&id=Segment%20Net%20Revenues) In Q2 2025, Topgolf revenue decreased by 1.8% to $485.3 million, Golf Equipment by 0.5% to $411.6 million, and Active Lifestyle by 14.4% to $213.6 million, primarily due to the Jack Wolfskin sale Q2 2025 Net Revenues by Segment (YoY Change) | Segment | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | | :--------------- | :----------------- | :----------------- | :------- | | Topgolf | $485.3 | $494.4 | (1.8)% | | Golf Equipment | $411.6 | $413.8 | (0.5)% | | Active Lifestyle | $213.6 | $249.6 | (14.4)% | H1 2025 Net Revenues by Segment (YoY Change) | Segment | H1 2025 (Millions) | H1 2024 (Millions) | % Change | | :--------------- | :----------------- | :----------------- | :------- | | Topgolf | $879.0 | $917.2 | (4.2)% | | Golf Equipment | $855.3 | $863.7 | (1.0)% | | Active Lifestyle | $468.5 | $521.1 | (10.1)% | [Segment Operating Income](index=3&type=section&id=Segment%20Operating%20Income) In Q2 2025, total segment operating income increased by 2.7% to $152.2 million, driven by a significant 39.5% increase in Active Lifestyle's operating income to $20.5 million, largely due to the Jack Wolfskin sale Q2 2025 Segment Operating Income (YoY Change) | Segment | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | | :------------------------- | :----------------- | :----------------- | :------- | | Topgolf | $55.4 | $56.1 | (1.2)% | | Golf Equipment | $76.3 | $77.4 | (1.4)% | | Active Lifestyle | $20.5 | $14.7 | 39.5% | | Total Segment Operating Income | $152.2 | $148.2 | 2.7% | H1 2025 Segment Operating Income (YoY Change) | Segment | H1 2025 (Millions) | H1 2024 (Millions) | % Change | | :------------------------- | :----------------- | :----------------- | :------- | | Topgolf | $43.5 | $59.0 | (26.3)% | | Golf Equipment | $177.9 | $159.5 | 11.5% | | Active Lifestyle | $51.1 | $39.4 | 29.7% | | Total Segment Operating Income | $272.5 | $257.9 | 5.7% | [Detailed Segment Commentary](index=3&type=section&id=Detailed%20Segment%20Commentary) This section provides specific commentary on the performance drivers for each of the company's operating segments during the second quarter of 2025, highlighting key revenue and operating income changes [Topgolf Segment](index=4&type=section&id=Topgolf%20Segment) Topgolf's Q2 2025 revenue decreased by 1.8% to $485.3 million, with a 6% decline in same venue sales partially offset by new venue revenue, while Adjusted EBITDA increased to $110.8 million due to cost reduction efforts - Segment revenue decreased **1.8% to $485.3 million**, with a **6% decline in same venue sales** partially offset by new venues[18](index=18&type=chunk) - Same venue sales of **-6% were ahead of expectations**, primarily due to improved traffic trends from new value initiatives[18](index=18&type=chunk) - Adjusted EBITDA increased **$1.3 million to $110.8 million**, reflecting ongoing cost reduction and labor efficiency initiatives[18](index=18&type=chunk) [Golf Equipment Segment](index=3&type=section&id=Golf%20Equipment%20Segment) The Golf Equipment segment's Q2 2025 revenue decreased by 0.5% to $411.6 million, mainly due to a more competitive launch timing environment, with operating income decreasing to $76.3 million despite gross margin and cost savings initiatives - Revenue decreased **0.5% to $411.6 million**, primarily due to a more competitive launch timing environment[14](index=14&type=chunk) - Segment operating income decreased **$1.1 million to $76.3 million**, with gross margin and cost savings largely offsetting incremental tariffs[14](index=14&type=chunk) [Active Lifestyle Segment](index=3&type=section&id=Active%20Lifestyle%20Segment) Active Lifestyle revenue decreased by $36.0 million to $213.6 million in Q2 2025, primarily due to the Jack Wolfskin business sale, but operating income increased by $5.8 million driven by the divestiture - Revenue decreased **$36.0 million to $213.6 million**, primarily due to the Jack Wolfskin business sale on May 31, 2025[14](index=14&type=chunk) - Operating income increased **$5.8 million**, primarily driven by the Jack Wolfskin sale, which typically incurs H1 seasonal losses[14](index=14&type=chunk) [Financial Position and Cash Flow](index=4&type=section&id=Financial%20Position%20and%20Cash%20Flow) Inventory decreased to $608.9 million due to the Jack Wolfskin sale, significantly boosting available liquidity to $1,161.7 million, while H1 2025 cash flow from operations declined, but investing activities improved due to the divestiture [Balance Sheet Highlights](index=4&type=section&id=Balance%20Sheet%20Highlights) Inventory decreased by $38.2 million year-over-year to $608.9 million, primarily due to the Jack Wolfskin sale, while available liquidity significantly increased by $377.9 million to $1,161.7 million, driven by cash proceeds from the divestiture - Inventory decreased **$38.2 million year-over-year to $608.9 million**, primarily due to a **$112.5 million decrease** from the Jack Wolfskin sale[19](index=19&type=chunk) - Available liquidity increased **$377.9 million to $1,161.7 million**, driven by **$290 million cash proceeds** from the Jack Wolfskin sale, lease financing, and cash from operations[19](index=19&type=chunk) [Cash Flow Highlights](index=11&type=section&id=Cash%20Flow%20Highlights) For the six months ended June 30, 2025, net cash provided by operating activities was $41.7 million, a decrease from the prior year, while net cash provided by investing activities significantly improved to $140.3 million, primarily due to $286.0 million in proceeds from the Jack Wolfskin sale H1 Cash Flow Summary (Millions) | Cash Flow Activity | H1 2025 | H1 2024 | | :--------------------------------- | :------ | :------ | | Net cash provided by operating activities | $41.7 | $151.4 | | Net cash provided by (used in) investing activities | $140.3 | $(174.0) | | Net cash provided by (used in) financing activities | $43.8 | $(52.3) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $233.5 | $(81.7) | | Cash and cash equivalents at end of period | $683.5 | $311.8 | - Proceeds from the sale of business line, net of cash retained, contributed **$286.0 million** to investing activities[39](index=39&type=chunk) [Outlook and Guidance](index=4&type=section&id=Outlook%20and%20Guidance) The company updated its full-year 2025 guidance to exclude Jack Wolfskin, reducing overall forecasts, but raised outlooks for continuing businesses and Topgolf due to strong Q2 performance and improved same venue sales [Full Year 2025 Outlook](index=5&type=section&id=Full%20Year%202025%20Outlook) The company updated its full-year 2025 guidance to reflect the exclusion of Jack Wolfskin, reducing forecasted revenue by $265 million and EBITDA by $26 million, but raised the outlook for continuing businesses and Topgolf due to better-than-expected Q2 performance 2025 Full Year Outlook (Current vs. Previous Estimate) | Metric | Current Estimate (Billions) | Previous Estimate (Billions) | 2024 As Reported (Billions) | | :--------------------------- | :-------------------------- | :--------------------------- | :-------------------------- | | Consolidated Net Revenues | $3.80 - $3.92 | $4.000 - $4.185 | $4.24 | | Topgolf Revenue | $1.71 - $1.77 | $1.680 - $1.790 | $1.81 | | Topgolf Same Venue Sales Growth | -6 to -9% | -6 to -12% | -9% | | Consolidated Adjusted EBITDA (Millions) | $430 - $490 | $415 - $505 | $588 | | Topgolf Adjusted EBITDA (Millions) | $265 - $295 | $240 - $300 | $337 | - Excluding Jack Wolfskin, the company increased the midpoint of its revenue guidance by approximately **$30 million** and Adjusted EBITDA guidance by approximately **$25 million** for continuing businesses[20](index=20&type=chunk) - Topgolf's full year same venue sales guidance midpoint increased to **-7.5% from -9%**[21](index=21&type=chunk) [Third Quarter 2025 Outlook](index=5&type=section&id=Third%20Quarter%202025%20Outlook) The company's Q3 2025 estimates reflect the Jack Wolfskin sale, with Consolidated Net Revenues projected between $880 - $920 million and Consolidated Adjusted EBITDA between $78 - $98 million, primarily due to forecasted decreases in Topgolf same venue sales and incremental tariffs Q3 2025 Outlook (Millions) | Metric | Q3 2025 Estimate (Millions) | Q3 2024 As Reported (Millions) | | :--------------------------- | :-------------------------- | :----------------------------- | | Consolidated Net Revenues | $880 - $920 | $1,010 | | Consolidated Adjusted EBITDA | $78 - $98 | $120 | - The decrease in Q3 Adjusted EBITDA is primarily related to **forecasted decreases in Topgolf same venue sales and incremental tariffs**[23](index=23&type=chunk) [Guidance Updates and Rationale](index=4&type=section&id=Guidance%20Updates%20and%20Rationale) The company updated its guidance to exclude the Jack Wolfskin business, reducing full-year forecasted revenue by $265 million and EBITDA by $26 million, but raised the outlook for continuing businesses and Topgolf due to better-than-expected Q2 performance - Guidance updated to reflect the Jack Wolfskin business sale, reducing full year forecasted revenue by **$265 million** and EBITDA by **$26 million**[20](index=20&type=chunk) - Excluding Jack Wolfskin, the company increased the midpoint of its revenue guidance by approximately **$30 million** and Adjusted EBITDA guidance by approximately **$25 million** for continuing businesses[20](index=20&type=chunk) - Topgolf's revenue and Adjusted EBITDA guidance increased due to **better than expected same venue sales performance in Q2**[21](index=21&type=chunk) [Corporate and Strategic Information](index=4&type=section&id=Corporate%20and%20Strategic%20Information) Topgolf's CEO resigned, delaying its planned spin-off to 2026, while the company remains committed to separating its Modern Golf and active lifestyle businesses [Topgolf Leadership and Separation Update](index=4&type=section&id=Topgolf%20Leadership%20and%20Separation%20Update) Artie Starrs, Topgolf's CEO, announced his resignation effective September 2025, which will likely delay the planned spin-off of Topgolf to 2026, after a new CEO is appointed, though the company remains committed to the separation - Artie Starrs, Topgolf's CEO, **resigned and is expected to remain through September 2025** for transition[19](index=19&type=chunk) - The Company remains committed to the **separation of its Topgolf and Core businesses**, pursuing a spin-off or sale of Topgolf[19](index=19&type=chunk) - A spin-off transaction is likely to occur in **2026**, after a new CEO is in place, due to Mr. Starrs' departure[19](index=19&type=chunk) [About Topgolf Callaway Brands](index=8&type=section&id=About%20Topgolf%20Callaway%20Brands) Topgolf Callaway Brands Corp. (NYSE: MODG) is a tech-enabled Modern Golf and active lifestyle company, offering leading golf equipment, apparel, and entertainment through a portfolio of global brands encompassing both on-course and off-course golf experiences - Topgolf Callaway Brands Corp. is a **tech-enabled Modern Golf and active lifestyle company**[32](index=32&type=chunk) - The company's portfolio includes global brands like **Topgolf, Callaway Golf, TravisMathew, Toptracer, Odyssey, and OGIO**[32](index=32&type=chunk) - 'Modern Golf' refers to the **dynamic and inclusive ecosystem of both on-course and off-course golf**[32](index=32&type=chunk) [Non-GAAP Measures and Disclosures](index=6&type=section&id=Non-GAAP%20Measures%20and%20Disclosures) This section defines non-GAAP financial measures like Constant Currency Basis and Adjusted EBITDA, and outlines forward-looking statements subject to various risks and uncertainties [Non-GAAP Information Definitions](index=6&type=section&id=Non-GAAP%20Information%20Definitions) This section defines key non-GAAP financial measures, including Constant Currency Basis for foreign exchange impacts, Non-Recurring and Non-cash Adjustments for specific one-time costs, and Adjusted EBITDA, which excludes various non-cash and non-recurring items - **Constant Currency Basis** estimates the impact of foreign currency exchange rate changes on financial results[25](index=25&type=chunk) - **Non-Recurring and Non-cash Adjustments** exclude certain non-cash amortization of acquired intangible assets and specific non-recurring costs, such as those related to the Jack Wolfskin sale or Transformation Plan[26](index=26&type=chunk) - **Adjusted EBITDA** excludes interest, taxes, depreciation, amortization, stock compensation, non-cash lease amortization, and other non-recurring and non-cash items[27](index=27&type=chunk) [Forward-Looking Statements](index=8&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding future plans, financial results, and growth opportunities, which are based on current expectations but are subject to various risks and uncertainties, meaning actual results may differ materially - Statements relating to future plans, financial results, performance, prospects, or growth opportunities are **forward-looking statements**[31](index=31&type=chunk) - These statements are based upon current information and expectations and are subject to **various risks and unknowns**, including global economic conditions, consumer demand, and transaction execution ability[31](index=31&type=chunk) - Readers are cautioned not to place undue reliance on these statements, as **actual results may differ materially**[31](index=31&type=chunk) [Condensed Consolidated Financial Statements](index=9&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the condensed consolidated balance sheets, statements of operations, cash flows, detailed net revenues by category and region, and non-GAAP reconciliations for Q2 and H1 2025 [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $7,607.3 million, a slight decrease from December 31, 2024, with current assets increasing due to higher cash and accounts receivable, while inventories decreased, and long-term debt also saw changes Condensed Consolidated Balance Sheets (Millions) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $683.5 | $445.0 | | Accounts receivable, net | $338.0 | $175.7 | | Inventories | $608.9 | $757.3 | | Total current assets | $1,881.3 | $1,600.7 | | Total assets | $7,607.3 | $7,636.1 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Convertible notes, net | $257.0 | — | | Total current liabilities | $1,015.7 | $825.9 | | Long-term debt, net | $1,195.1 | $1,457.9 | | Total shareholders' equity | $2,488.1 | $2,407.7 | [Condensed Consolidated Statements of Operations](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, total net revenues were $1,110.5 million, a decrease from the prior year, while income from operations increased slightly to $105.8 million, but net income significantly declined to $20.3 million Condensed Consolidated Statements of Operations (Millions, except per share data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Total net revenues | $1,110.5 | $1,157.8 | | Income from operations | $105.8 | $103.0 | | Net income | $20.3 | $62.1 | | Earnings per common share: Diluted | $0.11 | $0.32 | [Condensed Consolidated Statements of Cash Flow](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) For the six months ended June 30, 2025, net cash provided by operating activities was $41.7 million, a decrease from the prior year, while net cash provided by investing activities significantly improved to $140.3 million, primarily due to $286.0 million in proceeds from a business line sale Condensed Consolidated Statements of Cash Flow (Millions) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $41.7 | $151.4 | | Net cash provided by (used in) investing activities | $140.3 | $(174.0) | | Proceeds from sale of business line, net of cash retained | $286.0 | — | | Net cash provided by (used in) financing activities | $43.8 | $(52.3) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $233.5 | $(81.7) | [Consolidated Net Revenues and Operating Segment Information](index=12&type=section&id=Consolidated%20Net%20Revenues%20and%20Operating%20Segment%20Information) This section provides detailed breakdowns of net revenues by category, region, and operating segment for both the three and six months ended June 30, 2025, compared to the prior year, alongside segment operating income information Q2 2025 Net Revenues by Category (Millions) | Category | 2025 | 2024 | Growth/(Decline) Dollars (Millions) | Percent | | :---------------------- | :------ | :------ | :-------------------------------- | :------ | | Venues | $468.0 | $473.7 | $(5.7) | (1.2%) | | Golf Clubs | $312.7 | $310.2 | $2.5 | 0.8% | | Golf Balls | $98.9 | $103.6 | $(4.7) | (4.5%) | | Apparel | $123.7 | $145.0 | $(21.3) | (14.7%) | | Gear, Accessories & Other | $89.9 | $104.6 | $(14.7) | (14.1%) | | Total net revenues | $1,110.5 | $1,157.8 | $(47.3) | (4.1%) | Q2 2025 Net Revenues by Region (Millions) | Region | 2025 | 2024 | Growth/(Decline) Dollars (Millions) | Percent | | :------------ | :------ | :------ | :-------------------------------- | :------ | | United States | $862.2 | $891.3 | $(29.1) | (3.3%) | | Europe | $105.3 | $114.1 | $(8.8) | (7.7%) | | Asia | $99.8 | $109.1 | $(9.3) | (8.5%) | | Rest of world | $43.2 | $43.3 | $(0.1) | (0.2%) | | Total net revenues | $1,110.5 | $1,157.8 | $(47.3) | (4.1%) | H1 2025 Operating Segment Information (Millions) | Segment | 2025 | 2024 | Growth/(Decline) Dollars (Millions) | Percent | | :------------------------- | :------ | :------ | :-------------------------------- | :------ | | Net revenues: | | | | | | Topgolf | $879.0 | $917.2 | $(38.2) | (4.2%) | | Golf Equipment | $855.3 | $863.7 | $(8.4) | (1.0%) | | Active Lifestyle | $468.5 | $521.1 | $(52.6) | (10.1%) | | Total net revenues | $2,202.8 | $2,302.0 | $(99.2) | (4.3%) | | Segment operating income: | | | | | | Topgolf | $43.5 | $59.0 | $(15.5) | (26.3%) | | Golf Equipment | $177.9 | $159.5 | $18.4 | 11.5% | | Active Lifestyle | $51.1 | $39.4 | $11.7 | 29.7% | | Total segment operating income | $272.5 | $257.9 | $14.6 | 5.7% | [Supplemental Financial Information and Non-GAAP Reconciliation](index=14&type=section&id=Supplemental%20Financial%20Information%20and%20Non-GAAP%20Reconciliation) This section provides a reconciliation of GAAP to non-GAAP financial measures for both the three and six months ended June 30, 2025 and 2024, detailing adjustments for non-cash amortization, acquisition-related items, and other non-recurring charges, including a Topgolf Adjusted Segment EBITDA reconciliation Q2 2025 Non-GAAP Reconciliation (Millions, except per share data) | Item | GAAP 2025 | Non-Cash Amortization (Millions) | Non-Recurring Items (Millions) | Non-GAAP 2025 | | :------------------------- | :-------- | :------------------------------- | :----------------------------- | :------------ | | Income from operations | $105.8 | $(1.7) | $(13.7) | $121.2 | | Net income | $20.3 | $(1.3) | $(24.0) | $45.6 | | Earnings per share - diluted | $0.11 | $(0.01) | $(0.12) | $0.24 | H1 2025 Non-GAAP Reconciliation (Millions, except per share data) | Item | GAAP 2025 | Non-Cash Amortization (Millions) | Non-Recurring Items (Millions) | Non-GAAP 2025 | | :------------------------- | :-------- | :------------------------------- | :----------------------------- | :------------ | | Income from operations | $172.3 | $(4.3) | $(32.4) | $209.0 | | Net income | $22.4 | $(3.5) | $(40.0) | $65.9 | | Earnings per share - diluted | $0.12 | $(0.02) | $(0.20) | $0.35 | Q2 2025 Topgolf Adjusted Segment EBITDA Reconciliation (Millions) | Item | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Topgolf Segment operating income | $55.4 | $56.1 | | Non-GAAP depreciation and amortization expense | $51.1 | $49.1 | | Non-cash stock compensation expense | $1.6 | $1.2 | | Non-cash lease amortization expense | $2.7 | $3.1 | | Topgolf Adjusted Segment EBITDA | $110.8 | $109.5 |

Core Insights - Topgolf Callaway Brands Corp. reported second quarter financial results for 2025, highlighting a decrease in net revenues but an increase in operational income, leading to an optimistic outlook for the remainder of the year [1][2][10]. Financial Performance - The company's net revenues for Q2 2025 were $1,110.5 million, a decrease of 4.1% year-over-year, primarily due to declines in the Active Lifestyle segment following the sale of the Jack Wolfskin business [3][6][10]. - Adjusted EBITDA for Q2 2025 was $195.8 million, down 4.8% from the previous year, reflecting ongoing cost-saving initiatives [8][10]. - Net income for Q2 2025 was $20.3 million, a significant decrease of 67.3% compared to the prior year, attributed to non-recurring charges and increased tax expenses [8][10]. Segment Performance - Topgolf segment revenues decreased by 1.8% to $485.3 million, while Golf Equipment revenues were relatively stable, decreasing by 0.5% to $411.6 million [11][16]. - The Active Lifestyle segment saw a more pronounced decline, with revenues dropping 14.4% to $213.6 million, largely due to the impact of the Jack Wolfskin sale [11][16]. Guidance and Outlook - The company updated its full-year 2025 guidance, raising the revenue midpoint by approximately $30 million and Adjusted EBITDA by about $25 million for its continuing businesses, reflecting better-than-expected second quarter performance [15][19]. - The full-year consolidated net revenue estimate is now projected to be between $3.80 billion and $3.92 billion, while Adjusted EBITDA is expected to range from $430 million to $490 million [19][21]. Leadership and Strategic Changes - The company announced the resignation of CEO Artie Starrs, who will assist with the transition until September 2025, as it continues to pursue a separation of its Topgolf and Core businesses [17][18]. - The sale of the Jack Wolfskin business has strengthened the company's liquidity position, increasing available liquidity by 48% year-over-year to over $1.1 billion [10][17].

Group 1 - Topgolf Callaway Brands Corp. announced the resignation of CEO Artie Starrs, who will assist with the transition until September 2025 [1] - The company is conducting an executive search for a replacement and confirmed that Starrs has accepted another CEO position with an undisclosed business [1][2] - The company expressed satisfaction with Topgolf's second quarter financial results and improving same venue sales trends, attributing this to significant actions taken earlier in the year [2] Group 2 - The departure of Artie Starrs is not expected to affect the company's strategic direction or commitment to separating Topgolf, with plans for a spin-off or sale still in pursuit [2] - It is likely that a spin-off transaction will not occur until 2026, after a new CEO is appointed [2]