Topgolf Callaway Brands (US:MODG)2024-08-07 21:17Revenue Performance - For the three months ended June 30, 2024, net revenues decreased by $21.9 million or 1.9% compared to the same period in 2023, primarily due to lower sales in the Golf Equipment and Active Lifestyle segments[113]. - The Topgolf operating segment generated $494.4 million in net revenues for the three months ended June 30, 2024, reflecting a growth of $23.6 million or 5.0% compared to the same period in 2023[113]. - The Golf Equipment segment reported net revenues of $413.8 million for the three months ended June 30, 2024, a decline of $37.2 million or 8.2% compared to the same period in 2023, attributed to a planned shift in product launch timing[113]. - The Active Lifestyle segment experienced a decrease in net revenues to $249.6 million for the three months ended June 30, 2024, down $8.3 million or 3.2% compared to the same period in 2023, primarily due to lower sales of Jack Wolfskin products[113]. - For the six months ended June 30, 2024, total net revenues decreased by $45.1 million or 1.9% compared to the same period in 2023, with unfavorable foreign currency fluctuations impacting revenues by $18.6 million[115]. - Total net revenues decreased by $21.9 million (1.9%) for the three months ended June 30, 2024, and by $45.1 million (1.9%) for the six months ended June 30, 2024, compared to the same periods in 2023[116]. Geographic Revenue Breakdown - Net revenues in the United States increased by $4.6 million (0.5%) for the three months ended June 30, 2024, and by $22.5 million (1.3%) for the six months ended June 30, 2024, compared to the same periods in 2023[117]. - Net revenues in Europe decreased by $6.1 million (5.1%) for the three months ended June 30, 2024, and by $18.3 million (6.7%) for the six months ended June 30, 2024, primarily due to lower golf club and Jack Wolfskin sales[118]. - Net revenues in Asia decreased by $19.1 million (14.9%) for the three months ended June 30, 2024, and by $51.7 million (17.9%) for the six months ended June 30, 2024, due to soft market conditions and unfavorable foreign currency impacts[118]. Cost and Expense Analysis - Cost of products decreased by $12.5 million (3.2%) for the three months ended June 30, 2024, and by $41.6 million (5.0%) for the six months ended June 30, 2024, primarily due to decreased sales in Golf Equipment and Active Lifestyle segments[121]. - Other venue expenses increased by $22.3 million (7.0%) for the three months ended June 30, 2024, and by $40.2 million (6.5%) for the six months ended June 30, 2024, primarily due to the addition of new Topgolf venues[123]. - Selling, general and administrative expenses decreased by $20.1 million (7.2%) for the three months ended June 30, 2024, and by $15.6 million (2.8%) for the six months ended June 30, 2024, due to lower employee costs and marketing expenses[124]. - Research and development expenses increased by $5.0 million (22.7%) for the three months ended June 30, 2024, and by $5.4 million (12.1%) for the six months ended June 30, 2024, primarily due to asset impairment charges and higher employee costs[125]. Income and Earnings - Net income for the three months ended June 30, 2024 decreased to $62.1 million compared to $117.4 million for the same period in 2023, representing a decline of 47.1%[129]. - Diluted earnings per share for the three months ended June 30, 2024 decreased to $0.32 per share from $0.59 per share in the same period of 2023, a decrease of 45.8%[129]. - For the six months ended June 30, 2024, net income decreased to $68.6 million from $142.4 million in the same period of 2023, a decline of 52.1%[131]. - Diluted earnings per share for the six months ended June 30, 2024 decreased to $0.36 per share from $0.72 per share in the same period of 2023, a decrease of 50.0%[131]. Cash Flow and Liquidity - Cash and cash equivalents decreased by $81.7 million to $317.1 million as of June 30, 2024, from $398.8 million at December 31, 2023, due to funding operations and acquisitions[138]. - Consolidated net accounts receivable increased to $390.4 million as of June 30, 2024, from $200.5 million at December 31, 2023, primarily due to seasonal sales in the golf equipment segment[138]. - The company made a $50.0 million partial repayment of its Term Loan B during the second quarter of 2024[138]. - As of June 30, 2024, the company had $783.8 million in cash and availability under credit facilities, an increase of $136.4 million compared to June 30, 2023[140]. - The company plans to utilize liquidity and cash flows to fund significant cash obligations totaling $10,450.4 million, with long-term debt accounting for $1,505.5 million[142]. Debt and Interest Obligations - The company has $622.9 million in interest payments related to long-term debt, with $56.3 million due in the remainder of 2024[142]. - Interest expense, net increased by $5.3 million (10.3%) for the three months ended June 30, 2024 compared to the same period in 2023, primarily due to increased venue financing interest[127]. Market Conditions and Risks - Foreign currency exchange rates had an unfavorable impact of $10.8 million and $18.6 million on international net revenues for the three and six months ended June 30, 2024, respectively[118]. - A sensitivity analysis indicated a potential loss of $42.8 million from foreign currency forward contracts due to a hypothetical 10% unfavorable movement in foreign currencies[148]. - A 10% increase in interest rates would result in an incremental expense of $4.7 million over the 12-month period ended June 30, 2024[150]. - Inflationary pressures have increased the cost of products and services, potentially affecting gross margins and cash flows[151].