Topgolf Callaway Brands (MODG) - 2024 Q4 - Annual Results

Financial Performance - The Company reported a 3% increase in consolidated net revenue for Q4 2024, totaling $924.4 million, driven primarily by growth in the Golf Equipment segment [4]. - Adjusted EBITDA for Q4 2024 increased by 45.3% to $101.4 million, reflecting improved profitability in both the Topgolf and Golf Equipment segments [10]. - The Company experienced a GAAP net loss of $1,512.7 million for Q4 2024, largely due to a non-cash impairment charge of $1,452.0 million related to Topgolf's goodwill and intangible assets [2]. - Total operating cash flow increased by 5% to $382 million, while adjusted free cash flow rose by 27% to $203 million in Q4 2024 [3]. - For the full year 2024, net revenue decreased by 1.1% to $4,239.3 million, primarily due to declines in the Korea and Jack Wolfskin Europe businesses [11]. - Non-GAAP income from operations for Q4 2024 was $18.5 million, an increase of $27.2 million year-over-year, driven by improvements across all operating segments [8]. - Revenue remained flat at $439.0 million, with same venue sales declining by 8% [16]. - Total revenue for the year increased by $48.4 million to $1,809.4 million, despite a 9% decline in same venue sales [16]. - The company reported a net loss of $1,512.7 million for the twelve months ended December 31, 2024, compared to a net loss of $1,424.6 million in 2023, reflecting an increase of 6.2% [46]. - The company reported a total loss before income taxes of $1,473.2 million for the twelve months ended December 31, 2024, compared to a profit of $34.8 million in 2023 [44]. Segment Performance - The Golf Equipment segment reported a 12.7% increase in net revenue for Q4 2024, totaling $224.8 million [14]. - Topgolf's same venue sales, adjusted EBITDA, and venue margins all exceeded expectations in Q4 2024, indicating strong operational performance [3]. - Golf Clubs revenue grew by $18.6 million, or 11.6%, reaching $178.8 million, while Golf Balls revenue increased by $6.8 million, or 17.3%, totaling $46.0 million [43]. - Active Lifestyle segment revenue declined by $88.4 million, or 7.8%, totaling $1,047.9 million, while Topgolf revenue increased by $48.4 million, or 2.7%, reaching $1,809.4 million [44]. - Topgolf's segment operating income rose by $3.8 million, or 16.5%, to $26.9 million, contributing to a total segment operating income of $47.8 million, up 104.3% from the previous year [43]. Future Outlook - The company expects approximately $105 million in revenue headwinds and $120 million in Adjusted EBITDA headwinds for 2025 compared to 2024 [18]. - Consolidated net revenues for 2025 are estimated to be between $4.0 billion and $4.185 billion, down from $4.24 billion in 2024 [23]. - Topgolf same venue sales growth is expected to decline in the mid-single digits, compared to a 9% decline in 2024 [23]. Cash Flow and Liquidity - Available liquidity increased by $54.3 million to $796.9 million compared to December 31, 2023 [21]. - Cash flow from operating activities was $382.0 million, and Adjusted Free Cash Flow was $203.1 million [21]. - The company achieved a Consolidated Non-GAAP Adjusted Free Cash Flow of $203.1 million in 2024, an increase from $160.0 million in 2023 [49]. Impairments and Charges - Goodwill and intangible assets impairment for Q4 2024 was $1,452.0 million, significantly impacting the overall financial results [40]. - The company incurred $22.9 million in restructuring and reorganization charges during 2024, contributing to the overall financial losses [48]. - The total charges related to the impairment and abandonment of the Shankstars media game amounted to $12.7 million in 2024 [48]. - The company recognized non-cash goodwill and intangible assets impairment of $1,460.8 million in Q4 2024, primarily in the Topgolf operating segment [46]. Strategic Initiatives - The company plans to pursue a separation of the Topgolf business, with anticipated benefits and operational performance for the two independent companies post-separation [34]. - The company expects to continue investments in the business, focusing on brand momentum and demand for golf and outdoor activities [34]. - The planned separation of Topgolf and other strategic initiatives are expected to influence future financial results and market positioning [49].