Core Insights - Topgolf Callaway Brands reported a quarterly loss of $0.05 per share, significantly better than the Zacks Consensus Estimate of a loss of $0.21, representing an earnings surprise of +76.19% [1] - The company achieved revenues of $934 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 2.67%, although this is a decline from $1.01 billion in the same quarter last year [2] - The stock has increased approximately 17.8% year-to-date, outperforming the S&P 500's gain of 15.6% [3] Earnings Outlook - The future performance of Topgolf Callaway's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is -$0.48 on revenues of $792.32 million, and -$0.34 on revenues of $3.9 billion for the current fiscal year [7] Industry Context - The Leisure and Recreation Products industry, to which Topgolf Callaway belongs, is currently ranked in the top 22% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2025 were $934 million, a 3% increase year-over-year, driven by growth in both Topgolf and golf equipment segments [23][24] - Q3 adjusted EBITDA was $115 million, a decrease of $4 million year-over-year, primarily due to $12 million in incremental tariffs [23][24] - Net debt decreased to $2.23 billion from $2.54 billion year-over-year, attributed to increased cash [25][26] Business Line Data and Key Metrics Changes - Golf equipment segment revenue increased 4% year-over-year to $305 million, with a 4% increase in golf clubs and a 6% increase in golf balls [24] - Active lifestyle segment revenue was approximately flat at $156 million, with operating income down due to tariffs [12][24] - Topgolf revenue increased 4% to $472 million, driven by the addition of six new venues and a 1% increase in same-venue sales [24][25] Market Data and Key Metrics Changes - The U.S. golf market is up 2% year-to-date, with mid-single-digit growth in sell-through reports [7][8] - Participation in golf remains strong, with rounds played up 1.4% year-to-date [8] - Market conditions in Europe and the U.K. are positive, while Japan and Korea have seen slight declines [8] Company Strategy and Development Direction - The company is focused on delivering "demonstrably superior and pleasingly different" products to enhance pricing power and market share [10][14] - Continued emphasis on value initiatives at Topgolf, including new pricing strategies and membership programs, to drive traffic and sales [15][16][67] - The company is committed to the separation of Topgolf and is actively evaluating strategic alternatives [20][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic direction and raised full-year guidance based on strong Q3 performance and positive trends [5][27] - The impact of tariffs is acknowledged, with ongoing efforts to mitigate costs through efficiency improvements and pricing strategies [13][27] - Positive consumer engagement and market conditions are expected to support growth in the golf equipment segment [45][55] Other Important Information - The company plans to open four new Topgolf venues in 2025, with continued strong economic returns from new locations [19][25] - The implementation of a new point-of-sale system is expected to improve service speed and efficiency [18][67] - The company is optimistic about maintaining free cash flow positivity for both the total company and Topgolf in 2025 [28] Q&A Session Summary Question: Pricing power on golf equipment due to strong demand - Management indicated that pricing power is dependent on product differentiation and market conditions, with strategic pricing adjustments being considered to offset tariff impacts [34][35] Question: Trends in Topgolf visitation and food and beverage sales - Management reported strong traffic growth and positive trends in food and beverage sales, driven by new offerings and successful value initiatives [37][39] Question: Sell-through trends and consumer behavior changes - Management noted strong sell-through trends, with consumer engagement remaining high, and indicated a positive outlook for new product launches in 2026 [43][45] Question: Visibility on corporate event bookings for Q4 - Management confirmed reasonable visibility on corporate event bookings, with over half booked 30 days in advance [74] Question: Update on CEO search and its impact on separation timing - Management stated that the search for a new CEO is ongoing, with strong candidates, but did not provide a specific timeline for the separation process [87][89]

Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2025 were $934 million, a 3% increase year-over-year, driven by growth in both Topgolf and golf equipment segments [23][24] - Q3 adjusted EBITDA was $115 million, a decrease of $4 million year-over-year, primarily due to $12 million in incremental tariffs [23][24] - Net debt decreased to $2.23 billion from $2.54 billion year-over-year, attributed to increased cash [25][26] Business Line Data and Key Metrics Changes - Golf equipment segment revenue increased 4% year-over-year to $305 million, with golf clubs up 4% and golf balls up 6% [24] - Active lifestyle segment revenue was approximately flat at $156 million, with operating income down due to tariffs [12][24] - Topgolf revenue increased 4% to $472 million, driven by the addition of six new venues and a 1% increase in same-venue sales [24][27] Market Data and Key Metrics Changes - The US golf market is up 2% year-to-date, with mid-single-digit growth in sell-through reports [7][8] - Participation in golf remains strong, with rounds played up 1.4% year-to-date [8] - Market share in golf balls reached an all-time high of 22.6% in August across both on- and off-course channels [8] Company Strategy and Development Direction - The company is focused on delivering "demonstrably superior and pleasingly different" products to enhance pricing power and market share [10][14] - Continued emphasis on value initiatives at Topgolf, including new pricing strategies and marketing optimization [15][16] - The company is committed to the separation of Topgolf and is actively evaluating strategic alternatives [20][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic direction and raised full-year guidance based on strong Q3 performance [5][20] - The company anticipates ongoing challenges from tariffs but is implementing cost management initiatives to mitigate impacts [13][31] - Positive trends in consumer engagement and traffic growth at Topgolf are expected to continue into Q4 [15][60] Other Important Information - The company implemented a reduction in force of about 300 positions to manage costs effectively [13] - New venues for Topgolf are on track, with four openings planned for the year [19] - The company is optimistic about the impact of new technology and innovations on product performance [9][10] Q&A Session Summary Question: Pricing power on golf equipment due to strong demand - Management indicated that pricing power is dependent on product differentiation and will consider strategic pricing adjustments to mitigate tariff impacts [34][36] Question: Trends in Topgolf visitation and food and beverage sales - Management reported strong traffic growth and positive trends in food and beverage sales, driven by new offerings and value initiatives [37][41] Question: Sell-through trends and consumer behavior changes - Management noted strong sell-through trends and consumer engagement, with a positive outlook for the golf segment [44][46] Question: Visibility on corporate event bookings for Q4 - Management has reasonable visibility on corporate event bookings, with over half booked 30 days out [76] Question: Update on CEO search and its impact on separation timing - Management is encouraged by the quality of candidates for the CEO position and is confident in the existing team's performance during the transition [88][90] Question: Expectations for tariffs in 2026 - Management indicated that if current tariff rates hold, the impact could be more than double that of 2025 [90]

Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2025 were $934 million, a 3% increase year-over-year, driven by growth in both Topgolf and golf equipment segments [19][20] - Q3 adjusted EBITDA was $115 million, a decrease of $4 million year-over-year, primarily due to $12 million in incremental tariffs [19][20] - The company raised its full-year 2025 revenue guidance to a range of $3.90 to $3.94 billion, up $60 million at the midpoint [22][23] Business Line Data and Key Metrics Changes - Golf equipment revenue increased 4% year-over-year to $305 million, with a 4% increase in golf clubs and a 6% increase in golf balls [20] - Topgolf revenue increased 4% year-over-year to $472 million, driven by the addition of six new venues and a 1% increase in same-venue sales [20] - Active lifestyle segment revenue was approximately flat at $156 million, with operating income down due to tariffs [10][20] Market Data and Key Metrics Changes - The US golf market is up 2% year-to-date, with mid-single-digit growth in sell-through reports [5][6] - Rounds played are up 1.4% year-to-date, indicating strong participation in the sport [6] - Market conditions in Europe and the UK are positive, while Japan and Korea are experiencing declines [6] Company Strategy and Development Direction - The company is focused on delivering "demonstrably superior and pleasingly different" products to enhance pricing power and market share [8][11] - Continued emphasis on value initiatives at Topgolf, including promotions like Sunday Funday and half-off golf, has driven traffic growth [12][13] - The company is committed to the separation of Topgolf and is actively evaluating strategic alternatives [18][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic direction and raised full-year guidance based on strong Q3 performance and positive trends observed in October [4][18] - The company anticipates challenges from ongoing tariffs but is implementing cost management initiatives to mitigate impacts [11][23] - Management noted that consumer engagement in golf remains strong, with positive trends in both participation and sell-through [33][37] Other Important Information - The company experienced an incremental tariff expense of $12 million in Q3, with a forecast of approximately $40 million for the full year [10][20] - The company implemented a reduction in force of about 300 positions as part of cost management efforts [11] - New venues for Topgolf continue to open successfully, with four new venues planned for the year [17] Q&A Session Summary Question: Pricing power on golf equipment given strong demand - Management indicated that pricing power is dependent on product differentiation and will consider strategic pricing adjustments to mitigate tariff impacts [28][29] Question: Trends in Topgolf visitation and food and beverage sales - Management reported strong traffic growth and positive trends in food and beverage sales, driven by new offerings and increased visitation [30][31] Question: Sell-through trends and consumer behavior changes - Management noted strong sell-through trends, with higher engagement from consumers and a positive outlook for the upcoming product launches [32][33] Question: Visibility on corporate event bookings for Q4 - Management confirmed reasonable visibility on corporate event bookings, with over half booked 30 days out [44] Question: Update on CEO search and its impact on separation timing - Management stated that the CEO search is ongoing, and while timing for separation is uncertain, the existing team is performing well [48][49]

Revenue Performance - Net revenues for the three months ended September 30, 2025 decreased by $78.9 million or 7.8% compared to the same period in 2024, with a 3.2% increase when excluding the impact of the Jack Wolfskin sale[153]. - For the nine months ended September 30, 2025, net revenues decreased by $178.1 million or 5.4%, with a 1.1% decrease when excluding the Jack Wolfskin sale[154]. - Total net revenues for the three months ended September 30, 2025, were $934.0 million, a decrease of $78.9 million (7.8%) compared to $1,012.9 million in the same period of 2024[156]. - Topgolf net revenues increased by $19.0 million (4.2%) for the three months ended September 30, 2025, primarily due to new venue openings and improved traffic trends[157]. - Golf Equipment net revenues rose by $11.8 million (4.0%) for the three months ended September 30, 2025, driven by a 3.5% increase in golf club sales and a 5.6% increase in golf ball sales[159]. - Active Lifestyle segment saw a revenue decline of $109.7 million (41.2%) for the three months ended September 30, 2025, largely due to the sale of the Jack Wolfskin business[161]. - The ongoing business net revenues for the nine months ended September 30, 2025, were $3,041.2 million, a decrease of $33.2 million (1.1%) compared to $3,074.4 million in 2024[156]. Segment Performance - Segment operating income decreased by $6.5 million or 8.7%, primarily due to a decline in the Active Lifestyle segment following the Jack Wolfskin sale[153]. - The Golf Equipment segment saw an increase in net revenues, while Topgolf and Active Lifestyle segments experienced declines[154]. - Segment operating income for Topgolf increased by $2.8 million (9.9%) for the three months ended September 30, 2025, despite rising operating expenses[158]. - Golf Equipment segment operating income decreased by $3.6 million for the three months ended September 30, 2025, primarily due to $8.0 million in incremental tariffs[160]. Geographic Revenue Trends - Revenue from the United States for the three months ended September 30, 2025, was $749.9 million, an increase of $25.3 million (3.5%) compared to $724.6 million in 2024[163]. - Net revenues in the United States increased by $25.3 million (3.5%) for the three months ended September 30, 2025, compared to the same period in 2024, driven by new Topgolf venues and increased Golf Equipment sales[165]. - For the nine months ended September 30, 2025, net revenues in the United States decreased by $42.4 million (1.7%) due to declines in same venue sales and Golf Equipment sales, partially offset by new Topgolf venues[166]. - In Europe, net revenues decreased by $68.9 million (50.4%) and $89.0 million (22.7%) for the three and nine months ended September 30, 2025, respectively, primarily due to the sale of the Jack Wolfskin business[167]. - In Asia, net revenues decreased by $36.4 million (28.7%) and $44.5 million (12.2%) for the three and nine months ended September 30, 2025, respectively, due to the sale of Jack Wolfskin and soft market conditions[168]. Cost and Expense Management - Total costs and expenses decreased by $73.5 million (7.5%) for the three months ended September 30, 2025, and by $175.1 million (5.6%) for the nine months ended September 30, 2025[171]. - Cost of products decreased by $49.4 million (15.0%) and $97.5 million (8.7%) for the three and nine months ended September 30, 2025, respectively, primarily due to lower sales in the Active Lifestyle segment[172]. - Selling, general and administrative expenses decreased by $40.0 million (16.0%) for the three months ended September 30, 2025, and by $72.8 million (9.3%) for the nine months ended September 30, 2025, mainly due to the sale of Jack Wolfskin and cost reduction efforts[175][177]. - Research and development expenses decreased by $1.9 million (8.6%) and $11.0 million (15.2%) for the three and nine months ended September 30, 2025, respectively, due to reduced employee costs from business sales and restructuring[178]. Financial Position and Liquidity - Cash and cash equivalents increased by $415.6 million to $865.9 million as of September 30, 2025, primarily due to cash provided by operating activities of $270.1 million[191]. - Consolidated net accounts receivable rose to $218.5 million as of September 30, 2025, up from $175.7 million at December 31, 2024, reflecting seasonality in Golf Equipment sales[192]. - Inventory decreased by $188.6 million to $568.7 million as of September 30, 2025, compared to December 31, 2024, largely due to the sale of the Jack Wolfskin business[193]. - As of September 30, 2025, the company had $1,254.2 million in combined cash and availability under credit facilities, an increase of $391.2 million compared to September 30, 2024[196]. - Approximately 15% of the company's cash was held outside the United States as of September 30, 2025, maintaining an indefinite reinvestment assertion in most jurisdictions[197]. - The company plans to utilize its liquidity and cash flows from operations to fund significant cash obligations as of September 30, 2025[198]. Debt and Obligations - Total debt amounts to $1,529.4 million, with $1,157.9 million due thereafter[199]. - Interest payments related to total debt are projected at $431.9 million, with $186.6 million due in 2026-2027[199]. - Operating leases total $2,205.8 million, with $1,556.2 million due thereafter[199]. - Total estimated capital expenditures for the year ending December 31, 2025, are expected to be approximately $160.0 million, including $120.0 million for the Topgolf business[205]. - Future minimum lease payments for leases not yet commenced total $610.9 million[201]. - DLF obligations related to Topgolf venue construction amount to $5,116.2 million, with $4,676.9 million due thereafter[199]. - Unconditional purchase obligations total $116.6 million, with $70.8 million due in 2026-2027[199]. Economic and Market Conditions - Macroeconomic factors, including sustained inflation and high interest rates, are impacting consumer discretionary spending[149]. - The company is actively monitoring the effects of tariffs and inflation on its costs and pricing strategies[150][152]. - Inflation has contributed to increased costs, potentially affecting gross margins and operating expenses[213]. - A 10% increase in interest rates would result in an incremental expense of $3.5 million over the next 12 months[212]. - The estimated loss from foreign currency forward contracts is $12.4 million, based on a sensitivity analysis model[210]. Tax and Net Income - The provision for income tax increased by $11.8 million to a benefit of $7.6 million for the three months ended September 30, 2025, with an effective tax rate of 34.2% compared to 84.3% in the prior year[185]. - For the three months ended September 30, 2025, the GAAP net loss increased to $14.7 million, compared to a net loss of $3.6 million for the same period in 2024, representing an increase of $11.1 million[4]. - Non-GAAP net loss for the three months ended September 30, 2025 was $9.2 million, compared to a net income of $4.3 million for the same period in 2024, indicating a decrease of $13.5 million[188]. - For the nine months ended September 30, 2025, GAAP net income decreased to $7.7 million from $65.0 million in 2024, a decline of $57.3 million[189]. - Non-GAAP net income for the nine months ended September 30, 2025 was $56.7 million, down from $101.8 million in 2024, reflecting a decrease of $45.1 million[190].

November 6, 2025 Third Quarter 2025 Earnings Conference Call IMPORTANT NOTICES Forward-looking Statements. During the presentation, any comments made about future plans, events, financial results, performance, prospects, or growth opportunities, including statements relating to the Company's financial outlook (including, among others, Company, Topgolf and core business revenues, same venue sales, the Non-GAAP Projections (as defined below), and capital expenditures), our plans to pursue a separation of the ...

HIGHLIGHTS CARLSBAD, CA /November 6, 2025/ Topgolf Callaway Brands Corp. (the "Company" or "Topgolf Callaway Brands," "we," "our," "us") (NYSE: MODG) announced its financial results for the third quarter ended September 30, 2025. "We are pleased with our third quarter results, with both revenue and Adjusted EBITDA exceeding our expectations," commented Chip Brewer, President and Chief Executive Officer of Topgolf Callaway Brands Corp. "These results were led by strong performance and market conditions in ou ...

Accessibility StatementSkip Navigation RAISES FULL YEAR 2025 GUIDANCE HIGHLIGHTS CARLSBAD, Calif., Nov. 6, 2025 /PRNewswire/ -- Topgolf Callaway Brands Corp. (the "Company" or "Topgolf Callaway Brands," "we," "our," "us") (NYSE: MODG) announced its financial results for the third quarter ended September 30, 2025. "We are pleased with our third quarter results, with both revenue and Adjusted EBITDA exceeding our expectations," commented Chip Brewer, President and Chief Executive Officer of Topgolf Callaway B ...

Core Insights - Topgolf Callaway Brands Corp. plans to release its third quarter 2025 financial results on November 6, 2025, after market close, followed by a conference call to discuss the results and outlook [1] - The company will also participate in the Morgan Stanley Global Consumer & Retail Conference on December 3, 2025, in New York City [2] Company Overview - Topgolf Callaway Brands Corp. is a tech-enabled Modern Golf and active lifestyle company, offering golf equipment, apparel, and entertainment through brands like Topgolf, Callaway Golf, and TravisMathew [3]

Core Thesis - Topgolf Callaway Brands Corp. is positioned for significant upside due to its strong fundamentals and strategic separation of its TopGolf Entertainment business, expected in 2026 [2][5] Company Overview - As of October 15th, Topgolf Callaway's shares were trading at $9.30, with trailing and forward P/E ratios of 98.91 and 156.25 respectively [1] - The company is preparing to spin off or potentially sell its TopGolf Entertainment business, which has been underperforming, while the core business remains strong [2] Financial Metrics - Callaway trades at approximately 5× projected 2027 EPS and 1.2× EV/Sales, indicating significant upside potential compared to competitors like TaylorMade and Titleist [3] - The projected 2027 EPS for Callaway is $1.57, with scenarios suggesting a potential upside of 70% to 160% [5] Market Dynamics - The golf industry is experiencing macro tailwinds, including increased participation from females and juniors, and a growing number of rounds played annually [4] - There is a replacement cycle for golf clubs, particularly for drivers, irons, and wedges, which positions Callaway to capture premium spending [4] Revenue Streams - TopTracer technology, which covers 24,000 bays globally, is generating recurring high-margin revenue and is expected to provide a 15% uplift to EBIT [3] - The sale of Jack Wolfskin has reduced leverage and improved the balance sheet, enhancing financial flexibility for the company [5] Strategic Considerations - Despite challenges such as inventory glut and promotional pressures, Callaway maintains strong brand recognition and favorable product placement [4] - The standalone Callaway business, focusing on high-margin clubs, apparel, and TopTracer, presents a compelling investment opportunity supported by operational growth and strategic options [5]