Topgolf Callaway Brands (MODG) reported $1.11 billion in revenue for the quarter ended June 2025, representing a year-over-year decline of 4.1%. EPS of $0.24 for the same period compares to $0.42 a year ago. The reported revenue represents a surprise of +2.69% over the Zacks Consensus Estimate of $1.08 billion. With the consensus EPS estimate being $0.03, the EPS surprise was +700%. Shares of Topgolf Callaway have returned +2.9% over the past month versus the Zacks S&P 500 composite's +0.5% change. The stoc ...

Financial Data and Key Metrics Changes - Q4 consolidated revenues reached $924 million, a 3% year-over-year increase, driven by growth in Golf Equipment and slight increases in Active Lifestyle, while Topgolf revenue remained consistent with the prior year [60] - Adjusted EBITDA for Q4 was $101 million, reflecting a 45% increase due to improved operating results across all segments [60] - Full year consolidated adjusted free cash flow was $203 million, exceeding previous guidance [69] Business Line Data and Key Metrics Changes - Golf Equipment revenue increased by 13% year-over-year to $225 million, attributed to strong sales of golf clubs and the Chrome family of golf balls [63] - Topgolf generated adjusted EBITDA of $337 million, an 11% increase compared to 2024, despite same venue sales declining by 8% [19][60] - Active Lifestyle segment revenue increased by 1% year-over-year, primarily driven by TravisMathew's apparel sales [64] Market Data and Key Metrics Changes - U.S. on-course golf participation rose by 1.5 million to 28.1 million, with rounds played growing 2% year-over-year [43] - The macro environment for premium out-of-home entertainment is facing headwinds, impacting same venue sales at Topgolf [20][41] Company Strategy and Development Direction - The company is focused on the separation of Topgolf, evaluating options for a spin-off or potential sale [16] - Initiatives to improve same venue sales include new experiences, value offerings, and operational efficiencies [41][39] - The company anticipates growing Golf Equipment revenues slightly faster than the overall golf market, with expected gross margin improvements [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged year-over-year headwinds from foreign exchange and incentive compensation, projecting a $75 million negative impact on core business EBITDA [11] - Despite challenges, management remains optimistic about the future, expecting to mitigate headwinds through operational improvements [12][56] - The company is committed to returning to growth in same venue sales and improving profitability [41] Other Important Information - The company recorded a non-cash accounting charge of $1.45 billion related to the impairment of Topgolf goodwill and intangible assets [58] - Available liquidity increased to $797 million as of December 31, 2024, due to better cash flow generation [66] Q&A Session Summary Question: Could you elaborate on same venue sales trends when the weather has been neutral at Topgolf? - Management indicated that neutral weather markets are currently running down low to mid-single digits, with expectations for improvement in 2025 due to easier comparisons and positive consumer response to value messaging [78][79] Question: Can you talk about the key drivers behind the acceleration in corporate events comp? - Management noted that increased flexibility in product design and local market learnings contributed to the acceleration in corporate events comp, with expectations for walk-in sales to perform better than events in 2025 [89][92] Question: What drives the core business down year-over-year? - The primary driver for the decline in the core business is foreign exchange impacts, with additional challenges from competitive launches and reduced product launches planned for the second half of the year [96][97] Question: Is there anything structurally changed in the core business affecting profitability? - Management confirmed that there are no structural changes affecting profitability, with foreign exchange being the main driver of the decline [102][104] Question: Can you provide an update on expectations for pro forma leverage of the core business? - Management expressed confidence in achieving a leverage ratio of 3x or under within 12 months of the spin, emphasizing strong cash flow generation and operational flexibility [120][122]