CARLSBAD, Calif., Aug. 9, 2021 /PRNewswire/ -- Callaway Golf
Company (the "Company" or "Callaway") (NYSE: ELY) announced today
its financial results for the second quarter ended June 30, 2021.
"I am very pleased with our performance in the second quarter of
2021 with record revenue and Adjusted EBITDA in our golf equipment
and apparel businesses, as well as Topgolf results that continue to
exceed our expectations," commented Chip
Brewer, President and Chief Executive Officer of Callaway.
"These results reflect the strong momentum and exceptional
operating performance across all of our business segments and
underscore the strong consumer demand for our products and
services. We are encouraged to see that the interest in the sport
of golf remains at all-time highs among both experienced golfers
and new entrants to the sport."
"As we look ahead to the second half of 2021 and beyond, we are
confident that our unique portfolio of businesses is well
positioned for long-term growth," continued Mr. Brewer. "While in
the short-term we will experience some lingering supply constraints
and other challenges caused by the pandemic, we believe that these
challenges will be manageable given current demand levels and
actions we are taking to mitigate the impact. Our best estimate of
these impacts is included in the guidance we are providing today,
and we expect to deliver excellent financial results for the full
year. All in all, we are excited about the long-term trends
in our golf and outdoor apparel businesses, as well as the growth
opportunities for Topgolf, all of which will continue to drive
shareholder value."
GAAP AND NON-GAAP RESULTS
In addition to the Company's results prepared in accordance
with GAAP, the Company provided information on a non-GAAP basis.
The manner in which this non-GAAP information is derived is
discussed further toward the end of this release, and the Company
has provided in the tables to this release a reconciliation of the
non-GAAP information to the most directly comparable GAAP
information.
SUMMARY OF FINANCIAL RESULTS
The Company announced the following GAAP and non-GAAP financial
results for the second quarter and first half of 2021 (in
millions, except EPS):
GAAP
RESULTS
|
|
Q2
2021
|
Q2
2020
|
Change
|
|
First Half
2021
|
First Half
2020
|
Change
|
Net
Revenue
|
$914
|
$297
|
$617
|
|
$1,565
|
$739
|
$826
|
Income from
Operations
|
$107
|
($177)
|
$284
|
|
$183
|
($137)
|
$320
|
Other
Income/(Expense), net
|
($31)
|
$2
|
($33)
|
|
$213
|
($1)
|
$214
|
Income (Loss) before
Income Taxes
|
$76
|
($176)
|
$252
|
|
$396
|
($138)
|
$534
|
Net Income
(Loss)
|
$92
|
($168)
|
$260
|
|
$364
|
($139)
|
$503
|
Earnings (Loss) Per
Share - diluted
|
$0.47
|
($1.78)
|
$2.25
|
|
$2.28
|
($1.47)
|
$3.75
|
NON-GAAP
RESULTS
|
|
Q2
2021
|
Q2
2020
|
Change
|
|
First Half
2021
|
First Half
2020
|
Change
|
Net
Revenue
|
$914
|
$297
|
$617
|
|
$1,565
|
$739
|
$826
|
Income from
Operations
|
$118
|
$4
|
$114
|
|
$215
|
$47
|
$168
|
Other
Income/(Expense), net
|
($27)
|
$3
|
($30)
|
|
($33)
|
$1
|
($34)
|
Income (Loss) before
Income Taxes
|
$91
|
$7
|
$84
|
|
$182
|
$48
|
$134
|
Net Income
(Loss)
|
$70
|
$5
|
$65
|
|
$147
|
$36
|
$111
|
Earnings (Loss) Per
Share - diluted
|
$0.36
|
$0.06
|
$0.30
|
|
$0.92
|
$0.38
|
$0.54
|
Adjusted
EBITDA
|
$164
|
$29
|
$135
|
|
$292
|
$89
|
$203
|
Second Quarter 2021 Financial Highlights
- Net revenue increase was driven by higher-than-expected
strength across both the Golf Equipment and Apparel, Gear &
Other segments, as demand remained high for golf and outdoor
activities. In addition, Topgolf, which merged with the Company in
March 2021, also contributed to
strong, higher-than-expected revenue growth.
- Non-GAAP income from operations increase was led by a
$96 million increase in income from
operations from the Company's Golf Equipment and Apparel, Gear
& Other businesses as well as an incremental $24 million from the addition of the Topgolf
business for the full second quarter.
- Non-GAAP other income/(expense), net decreased $30 million primarily due to a $14 million increase in interest expense related
to the addition of Topgolf as well as last year's $11 million gain from the settlement of a cross
currency swap arrangement.
- Fully diluted shares were 194 million shares of common stock in
the second quarter of 2021, an increase of 100 million shares
compared to 94 million shares in the second quarter of 2020. The
increased share count is primarily related to the issuance of
additional shares in connection with the Topgolf merger.
- Adjusted EBITDA increase was driven by a $78 million increase in the Company's Golf
Equipment and Apparel, Gear & Other businesses and the addition
of $57 million from the Topgolf
business.
SEGMENT RESULTS
As a result of the Topgolf merger, the Company now has three
operating segments, namely Golf Equipment; Apparel, Gear and Other;
and Topgolf. The Company evaluates the performance of its
operating segments based on segment operating income. Management
uses total segment operating income as a measure of its operational
performance, excluding corporate overhead and certain non-recurring
and non-cash charges and benefits. The Company believes that
information about total segment operating income allows investors
to better evaluate operating results and changes in results without
these non-operational factors.
The following is a reconciliation of income before income taxes
to total segment operating income (in millions) for the second
quarter and first half of 2021 and 2020:
|
Q2
2021
|
Q2
2020
|
Change
|
|
First Half
2021
|
First Half
2020
|
Change
|
Total segment
operating income
|
$138
|
$17
|
$121
|
|
$247
|
$72
|
$175
|
Reconciling
items*
|
($31)
|
($195)
|
$164
|
|
($64)
|
($209)
|
$145
|
Income from
Operations
|
$107
|
($177)
|
$284
|
|
$183
|
($137)
|
$320
|
Gain on Topgolf
Investment
|
-
|
-
|
-
|
|
$253
|
-
|
$253
|
Interest
Expense
|
($29)
|
($12)
|
($17)
|
|
($46)
|
($21)
|
($25)
|
Other
Income
|
($3)
|
$14
|
($17)
|
|
$7
|
$20
|
($14)
|
Income before income
taxes
|
$76
|
($176)
|
$252
|
|
$396
|
($138)
|
$534
|
*Reconciling items
exclude corporate overhead and certain non-recurring and non-cash
items as described in the schedules to this release.
|
Second Quarter 2021 Segment Highlights
- Golf equipment
-
- Revenue increased 91% year-over-year and 37% compared to second
quarter 2019 pre-pandemic levels, driven by the continued surge in
golf demand and participation, successful launch of the new EPIC
line of woods and APEX line of irons and the continued success of
the Chrome Soft line of golf balls, as compared to the Company's
operations and golf retail being significantly impacted by
restrictions and shutdowns due to the pandemic for the majority of
the second quarter of 2020
- Both the golf club and golf ball products saw significant
growth year-over-year, with golf club sales increasing 105% and
golf ball sales increasing 51%
- Segment operating income increased 236% due to the increased
revenue, operating expense leverage and favorable foreign currency
exchange rates
- Apparel, Gear and Other
-
- Revenue increased 115% year-over-year, driven by a 152%
increase in apparel sales as well as an 88% increase in gear,
accessories and other as all brands rebounded from the year ago
quarter, which was severely impacted by shutdowns due to the
pandemic
- Compared to second quarter 2019 pre-pandemic levels, revenue
increased 21%
- TravisMathew experienced significant growth in the quarter as
momentum in demand for the brand continued to increase, while Jack
Wolfskin and Callaway's soft goods business also increased amid
continued consumer demand for golf and outdoor products
- Jack Wolfskin showed resiliency, despite most European retail
locations being negatively impacted by COVID-19 restrictions for a
significant portion of the second quarter of 2021
- Operating income for the apparel, gear and other segment
increased $28 million to $16 million in the second quarter of 2021
compared to a $12 million loss in the
second quarter of 2020, driven by the increased sales and fixed
cost leverage and grew $4 million
versus the second quarter of 2019
- Topgolf
-
- Contributed $325 million of
revenue and $24 million of segment
operating income in the second quarter of 2021
- Same venue sales increased to the low 90s as a percent of 2019
levels
- Opened six new domestic locations in the first six months of
2021, including four locations opened during second quarter
2021
The table below provides the breakout of segment revenues and
segment operating income for the second quarter and first half of
2021:
Segment Net
Revenue
|
Q2
2021
|
Q2
2020
|
Change
|
|
First Half
2021
|
First
Half
2020
|
Change
|
Golf
Equipment
|
$401
|
$210
|
$191
|
|
$778
|
$502
|
$276
|
Apparel, Gear &
Other
|
$187
|
$87
|
$100
|
|
$369
|
$238
|
$131
|
Topgolf
|
$325
|
-
|
$325
|
|
$418
|
-
|
$418
|
Total Segment Net
Revenue
|
$914
|
$297
|
$617
|
|
$1,565
|
$739
|
$826
|
|
Total Segment
Operating Income
|
Q2
2021
|
Q2
2020
|
Change
|
|
First Half
2021
|
First
Half
2020
|
Change
|
Golf
Equipment
% of segment
revenue
|
$98
24.4%
|
$29
13.9%
|
$69
1,050 bps
|
|
$183
23.5%
|
$88
17.5%
|
$95
600 bps
|
Apparel, Gear &
Other
% of segment
revenue
|
$16
8.4%
|
($12)
(13.5%)
|
$28
2,190 bps
|
|
$36
9.8%
|
($16)
-6.5%
|
$52
1,630 bps
|
Topgolf
% of segment
revenue
|
$24
7.4%
|
-
-
|
$24
-
|
|
$28
6.7%
|
-
-
|
$28
-
|
Total segment
operating income
% of total net revenue
|
$138
15.1%
|
$17
5.9%
|
$121
920
bps
|
|
$247
15.8%
|
$72
9.8%
|
$175
600
bps
|
BUSINESS OUTLOOK
The third quarter and full year 2021 projections set forth below
are based on the Company's best estimates at this time. They
include the estimated impact of certain factors, including (1)
ongoing uncertainty due to the impact of COVID-19 on the supply
chain, (2) changes in foreign currency effects, which are estimated
to have a positive full year impact of $36
million on net sales, and (3) increased freight costs. In
addition, due to the timing of the Topgolf acquisition on
March 8, 2021, Callaway's reported
full year financial results will only include 10 months of Topgolf
results in 2021 and therefore will not include January and February
results which were in the aggregate $142.9
million in revenue and $2.3
million in Adjusted EBITDA.
|
FULL YEAR
2021
|
|
THIRD QUARTER
2021
|
(in
millions)
|
2021
Estimate
|
2020
Results
|
2019
Results
|
|
Q3
2021
Estimate
|
Q3
2020
Results
|
Q3
2019
Results
|
Net
Revenue
|
$3,025 –
$3,055
|
$1,590
|
$1,701
|
|
$775 -
$790
|
$476
|
$426
|
Adjusted
EBITDA
|
$345 –
$360
|
$163
|
$210
|
|
$51 - $58
|
$87
|
$57
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue: Full year 2021 net revenue estimate assumes
continued positive demand fundamentals for Callaway's Golf
Equipment and Apparel, Gear and Other segments, along with Topgolf
segment revenue for the 10 months beginning March 8, 2021 approaching 2019 full year levels
of $1,060 million. The outlook also
assumes $55 million of revenue risk
due to short-term supply chain constraints, almost all of which
occurs in third quarter 2021.
Adjusted EBITDA: Full year 2021 Adjusted EBITDA estimate
assumes the Topgolf segment will deliver over $100 million in Adjusted EBITDA for the 10 months
beginning March 8, 2021. The outlook
takes into account elevated freight costs in the second half of
2021, as well as non-GAAP operating expenses that are approximately
$100 million higher than full year
2019 non-GAAP operating expenses primarily due to cost of living
and inflationary pressures over two years, the impact of foreign
currency changes and investment back into the Company's business.
This estimate for non-GAAP operating expenses is $20 to $30 million
higher than the Company's initial expectations at the beginning of
the year and is related primarily to accelerated investments in the
apparel business and variable costs associated with the strong
performance of the business this year.
ADDITIONAL INFORMATION AND DISCLOSURES
Conference Call and Webcast
The Company will be holding a conference call at 2:00 p.m. Pacific time today, August 9, 2021, to discuss the Company's
financial results, outlook and business. The call will be broadcast
live over the Internet and can be accessed at
http://ir.callawaygolf.com/. A replay of the conference call will
be available approximately two hours after the call ends, and will
remain available through 9:00 p.m. Pacific
time on August 16, 2021.
The replay may be accessed through the Internet at
http://ir.callawaygolf.com/.
Non-GAAP Information
The GAAP results contained in this press release and the
financial statement schedules attached to this press release have
been prepared in accordance with accounting principles generally
accepted in the United States
("GAAP"). To supplement the GAAP results, the Company has
provided certain non-GAAP financial information as follows:
Constant Currency Basis. The Company provided certain
information regarding the Company's financial results or projected
financial results on a "constant currency basis." This information
estimates the impact of changes in foreign currency rates on the
translation of the Company's current or projected future period
financial results as compared to the applicable comparable
period. This impact is derived by taking the current or
projected local currency results and translating them into U.S.
dollars based upon the foreign currency exchange rates for the
applicable comparable period. It does not include any other effect
of changes in foreign currency rates on the Company's results or
business.
Non-Recurring and Non-cash Adjustments. The Company
provided information excluding certain non-cash amortization of
intangibles and other assets related to the Company's acquisitions,
non-recurring transaction and transition costs related to
acquisitions, severance costs related to the Company's
cost-reduction initiatives, and other non-recurring costs,
including costs related to the merger and integration with Topgolf,
transition to the Company's new North American Distribution Center,
implementation of new IT systems, the cumulative $6 million non-cash valuation allowance recorded
against certain of the Company's deferred tax assets as a result of
the Topgolf merger, the $253 million
non-cash gain as the result of the Company's prior equity position
in Topgolf, the $174 million non-cash
impairment charge related to the Jack Wolfskin goodwill and trade
name, as well as non-cash amortization of the debt discount related
to the Company's convertible notes.
Adjusted EBITDA. The Company provides information
about its results excluding interest, taxes, depreciation and
amortization expenses, non-cash stock compensation expense,
non-cash lease amortization expense, and the non-recurring and
non-cash items referenced above.
In addition, the Company has included in the schedules attached
to this release a reconciliation of certain non-GAAP information to
the most directly comparable GAAP information. The non-GAAP
information presented in this release and related schedules should
not be considered in isolation or as a substitute for any measure
derived in accordance with GAAP. The non-GAAP information may also
be inconsistent with the manner in which similar measures are
derived or used by other companies. Management uses such
non-GAAP information for financial and operational decision-making
purposes and as a means to evaluate period-over-period comparisons
and in forecasting the Company's business going forward. Management
believes that the presentation of such non-GAAP information, when
considered in conjunction with the most directly comparable GAAP
information, provides additional useful comparative information for
investors in their assessment of the underlying performance of the
Company's business with regard to these items. The Company has
provided reconciling information in the attached schedules.
Definitions
Same venue sales. Callaway defines same venue sales for
its Topgolf business as sales for the comparable venue base, which
is defined as the number of Company-operated venues with at least
24 full fiscal months of operations.
Forward-Looking Statements
Statements used in this press release that relate to future
plans, events, financial results, performance, prospects, or growth
opportunities, including statements relating to the Company's and
Topgolf's financial outlook for the full year and third quarter of
2021 (including revenue, Adjusted EBITDA and operating expenses),
continued impact of the COVID-19 pandemic on the Company's business
and the Company's ability to improve and recover from such impact,
impact of any measures taken to mitigate the effect of the
pandemic, strength and demand of the Company's products and
services, continued brand momentum, demand for golf and outdoor
apparel, continued investments in the business, increases in
shareholder value, post-pandemic consumer trends and behavior,
future industry and market conditions, the benefits of the Topgolf
merger, including the anticipated operations, financial position,
liquidity, performance, prospects or growth and scale opportunities
of the Company, Topgolf or the combined company, and statements of
belief and any statement of assumptions underlying any of the
foregoing, are forward-looking statements as defined under the
Private Securities Litigation Reform Act of 1995. The words
"believe," "expect," "estimate," "could," "should," "intend,"
"may," "plan," "seek," "anticipate," "project" and similar
expressions, among others, generally identify forward-looking
statements, which speak only as of the date the statements were
made and are not guarantees of future performance. These statements
are based upon current information and expectations. Accurately
estimating the forward-looking statements is based upon various
risks and unknowns, including disruptions to business operations
from additional regulatory restrictions in response to the COVID-19
pandemic (such as travel restrictions, government-mandated
shut-down orders or quarantines) or voluntary "social distancing"
that affects employees, customers and suppliers; costs, expenses or
difficulties related to the merger with Topgolf, including the
integration of the Topgolf business; failure to realize the
expected benefits and synergies of the Topgolf merger in the
expected timeframes or at all; production delays, closures of
manufacturing facilities, retail locations, warehouses and supply
and distribution chains; staffing shortages as a result of remote
working requirements or otherwise; uncertainty regarding global
economic conditions, particularly the uncertainty related to the
duration and ongoing impact of the COVID-19 pandemic, and related
decreases in customer demand/spending and ongoing increases
in operating and freight costs and supply constraints; the
Company's level of indebtedness; continued availability of credit
facilities and liquidity and ability to comply with applicable debt
covenants; effectiveness of capital allocation and cost/expense
reduction efforts; continued brand momentum and product success;
growth in the direct-to-consumer and e-commerce channels; ability
to realize the benefits of the continued investments in the
Company's business; consumer acceptance of and demand for the
Company's and its subsidiaries' products and services; cost of
living and inflationary pressures; any changes in U.S. trade,
tax or other policies, including restrictions on imports or an
increase in import tariffs; future consumer discretionary
purchasing activity, which can be significantly adversely affected
by unfavorable economic or market conditions; future retailer
purchasing activity, which can be significantly negatively affected
by adverse industry conditions and overall retail inventory levels;
and future changes in foreign currency exchange rates and the
degree of effectiveness of the Company's hedging programs. Actual
results may differ materially from those estimated or anticipated
as a result of these risks and unknowns or other risks and
uncertainties, including the effect of terrorist activity, armed
conflict, natural disasters or pandemic diseases, including
expanded outbreak of COVID-19 and its variants, on the economy
generally, on the level of demand for the Company's and its
subsidiaries' products and services or on the Company's ability to
manage its operations, supply chain and delivery logistics in such
an environment; delays, difficulties or increased costs in the
supply of components or commodities needed to manufacture the
Company's products or in manufacturing the Company's products; and
a decrease in participation levels in golf generally, during or as
a result of the COVID-19 pandemic. For additional information
concerning these and other risks and uncertainties that could
affect these statements and the Company's business, see the
Company's Annual Report on Form 10-K for the year ended
December 31, 2020 as well as other
risks and uncertainties detailed from time to time in the Company's
reports on Forms 10-Q and 8-K subsequently filed with the
Securities and Exchange Commission. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Company undertakes no
obligation to republish revised forward-looking statements to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
About Callaway Golf Company
Callaway Golf Company
(NYSE: ELY) is an unrivaled tech-enabled golf company delivering
leading golf equipment, apparel and entertainment, with a portfolio
of global brands including Callaway Golf, Topgolf, Odyssey, OGIO,
TravisMathew and Jack Wolfskin. Through an unwavering
commitment to innovation, Callaway manufactures and sells premium
golf clubs, golf balls, golf and lifestyle bags, golf and lifestyle
apparel and other accessories, and provides world-class golf
entertainment experiences through Topgolf, its wholly-owned
subsidiary. For more information please visit
www.callawaygolf.com, www.topgolf.com, www.odysseygolf.com,
www.OGIO.com, www.travismathew.com, and
www.jack-wolfskin.com.
Investor Contacts
Brian
Lynch
Lauren Scott
(760) 931-1771
invrelations@callawaygolf.com
CALLAWAY GOLF
COMPANY
CONSOLIDATED
CONDENSED BALANCE SHEETS
(Unaudited)
(In
thousands)
|
|
|
June 30,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
415,204
|
|
|
|
$
|
366,119
|
|
Restricted
Cash
|
|
2,469
|
|
|
|
—
|
|
Accounts receivable,
net
|
|
325,275
|
|
|
|
138,482
|
|
Inventories
|
|
335,346
|
|
|
|
352,544
|
|
Other current
assets
|
|
175,756
|
|
|
|
55,482
|
|
Total current
assets
|
|
1,254,050
|
|
|
|
912,627
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
1,264,886
|
|
|
|
146,495
|
|
Operating lease
right-of-use assets, net
|
|
1,057,225
|
|
|
|
194,776
|
|
Intangible assets,
net
|
|
3,578,545
|
|
|
|
540,997
|
|
Other
assets
|
|
117,128
|
|
|
|
185,705
|
|
Total
assets
|
|
$
|
7,271,834
|
|
|
|
$
|
1,980,600
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
426,577
|
|
|
|
$
|
276,209
|
|
Accrued employee
compensation and benefits
|
|
95,427
|
|
|
|
30,937
|
|
Asset-based credit
facilities
|
|
21,438
|
|
|
|
22,130
|
|
Current operating
lease liabilities
|
|
55,492
|
|
|
|
29,579
|
|
Construction
advances
|
|
63,636
|
|
|
|
—
|
|
Deferred
revenue
|
|
83,580
|
|
|
|
2,546
|
|
Other current
liabilities
|
|
41,482
|
|
|
|
29,871
|
|
Total current
liabilities
|
|
787,632
|
|
|
|
391,272
|
|
|
|
|
|
|
|
Long-term
debt
|
|
1,064,429
|
|
|
|
650,564
|
|
Long-term operating
leases
|
|
1,174,780
|
|
|
|
177,996
|
|
Deemed landlord
financing
|
|
263,219
|
|
|
|
—
|
|
Long-term
liabilities
|
|
242,311
|
|
|
|
85,124
|
|
Total Callaway Golf
Company shareholders' equity
|
|
3,739,463
|
|
|
|
675,644
|
|
Total liabilities and
shareholders' equity
|
|
$
|
7,271,834
|
|
|
|
$
|
1,980,600
|
|
CALLAWAY GOLF
COMPANY
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands,
except per share data)
|
|
|
Three Months
Ended
June
30,
|
|
2021
|
|
2020
|
Net
revenues:
|
|
|
|
Products
|
$
|
591,410
|
|
|
$
|
296,996
|
|
Services
|
322,231
|
|
|
—
|
|
Total net
revenues
|
913,641
|
|
|
296,996
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
Cost of
products
|
315,008
|
|
|
174,941
|
|
Cost of services,
excluding depreciation and amortization
|
42,786
|
|
|
—
|
|
Other venue
expenses
|
202,339
|
|
|
—
|
|
Selling, general and
administrative expense
|
221,124
|
|
|
115,215
|
|
Research and
development expense
|
20,271
|
|
|
10,020
|
|
Goodwill and tradename
impairment
|
—
|
|
|
174,269
|
|
Venue pre-opening
costs
|
4,844
|
|
|
—
|
|
Total costs and
expenses
|
806,372
|
|
|
474,445
|
|
|
|
|
|
Income (loss) from
operations
|
107,269
|
|
|
(177,449)
|
|
Other income
(expense), net
|
(31,378)
|
|
|
1,834
|
|
Income tax
benefit
|
(15,853)
|
|
|
(7,931)
|
|
Net income
(loss)
|
$
|
91,744
|
|
|
$
|
(167,684)
|
|
|
|
|
|
Earnings (loss) per
common share:
|
|
|
|
Basic
|
$0.50
|
|
|
$(1.78)
|
|
Diluted
|
$0.47
|
|
|
$(1.78)
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
185,225
|
|
|
94,141
|
|
Diluted
|
194,334
|
|
|
94,141
|
|
|
|
|
|
|
Six Months
Ended
June
30,
|
|
2021
|
|
2020
|
Net
revenues:
|
|
|
|
Products
|
$
|
1,151,368
|
|
|
$
|
739,272
|
|
Services
|
413,894
|
|
|
—
|
|
Total net
revenues
|
1,565,262
|
|
|
739,272
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
Cost of
products
|
625,638
|
|
|
421,543
|
|
Cost of services,
excluding depreciation and amortization
|
53,771
|
|
|
—
|
|
Other venue
expenses
|
267,776
|
|
|
—
|
|
Selling, general and
administrative expense
|
395,004
|
|
|
256,969
|
|
Research and
development expense
|
33,016
|
|
|
23,260
|
|
Goodwill and tradename
impairment
|
—
|
|
|
174,269
|
|
Venue pre-opening
costs
|
6,689
|
|
|
—
|
|
Total costs and
expenses
|
1,381,894
|
|
|
876,041
|
|
|
|
|
|
Income (loss) from
operations
|
183,368
|
|
|
(136,769)
|
|
Gain on Topgolf
investment
|
252,531
|
|
|
—
|
|
Other income
(expense), net
|
(39,804)
|
|
|
(801)
|
|
Income tax
provision
|
31,890
|
|
|
1,220
|
|
Net income
(loss)
|
$
|
364,205
|
|
|
$
|
(138,790)
|
|
|
|
|
|
Earnings (loss) per
common share:
|
|
|
|
Basic
|
$2.40
|
|
|
$(1.47)
|
|
Diluted
|
$2.28
|
|
|
$(1.47)
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
151,541
|
|
|
94,225
|
|
Diluted
|
159,639
|
|
|
94,225
|
|
|
|
|
|
|
|
|
On March 8, 2021, the
Company completed its merger with Topgolf International, Inc.
("Topgolf") and has included the results of operations for Topgolf
in its consolidated condensed statement of operations from that
date forward. Additionally, the Company has modified the
presentation of its consolidated condensed statement of operations
for the three and six months ended June 30, 2021 and 2020 to
provide investors with additional information to assess the
performance of the combined entity.
|
CALLAWAY GOLF
COMPANY
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOW
(Unaudited)
(In
thousands)
|
|
|
Six Months
Ended
June
30,
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
|
364,205
|
|
|
$
|
(138,790)
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
Depreciation and amortization
|
63,542
|
|
|
18,357
|
|
Lease
amortization expense
|
26,896
|
|
|
16,313
|
|
Amortization of debt issuance costs
|
2,618
|
|
|
1,823
|
|
Debt
discount amortization
|
6,527
|
|
|
1,483
|
|
Impairment loss
|
—
|
|
|
174,269
|
|
Deferred
taxes, net
|
28,067
|
|
|
8,684
|
|
Non-cash
share-based compensation
|
15,648
|
|
|
4,794
|
|
Loss on
disposal of long-lived assets
|
100
|
|
|
123
|
|
Gain on
Topgolf investment
|
(252,531)
|
|
|
—
|
|
Unrealized net gains on hedging instruments and foreign
currency
|
(5,048)
|
|
|
(14,059)
|
|
Acquisition costs
|
(16,199)
|
|
|
—
|
|
Changes in assets and
liabilities
|
(133,358)
|
|
|
(93,318)
|
|
Net cash provided by
(used in) operating activities
|
100,467
|
|
|
(20,321)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Cash acquired in
merger
|
171,294
|
|
|
—
|
|
Capital
expenditures
|
(120,833)
|
|
|
(25,097)
|
|
Note receivable, net
of discount
|
—
|
|
|
(5,234)
|
|
Net cash provided by
(used in) investing activities
|
50,461
|
|
|
(30,331)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Repayments of credit
facilities, net
|
(110,757)
|
|
|
(89,029)
|
|
Proceeds from lease
financing
|
24,799
|
|
|
—
|
|
Exercise of stock
options
|
18,403
|
|
|
130
|
|
Acquisition of
treasury stock
|
(12,538)
|
|
|
(21,953)
|
|
Repayments of
long-term debt
|
(12,029)
|
|
|
(5,504)
|
|
Debt issuance
cost
|
(5,441)
|
|
|
(9,119)
|
|
Payment on contingent
earn-out obligation
|
(3,577)
|
|
|
—
|
|
Repayments of
financing leases
|
(200)
|
|
|
(206)
|
|
Dividends
paid
|
(3)
|
|
|
(1,891)
|
|
Proceeds from issuance
of convertible notes
|
—
|
|
|
258,750
|
|
Proceeds from issuance
of long-term debt
|
—
|
|
|
9,766
|
|
Premium paid for
capped call confirmations
|
—
|
|
|
(31,775)
|
|
Net cash (used in)
provided by financing activities
|
(101,343)
|
|
|
109,169
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
1,969
|
|
|
(767)
|
|
Net increase in cash,
cash equivalents and restricted cash
|
51,554
|
|
|
57,750
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
366,119
|
|
|
106,666
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
417,673
|
|
|
$
|
164,416
|
|
CALLAWAY GOLF
COMPANY
Consolidated Net
Sales and Operating Segment Information
(Unaudited)
(In
thousands)
|
|
|
|
Net Revenues
by Product Category(2)
|
|
|
Three Months
Ended
June
30,
|
|
Growth
|
|
Non-GAAP
Constant
Currency
vs.
2020(1)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Golf Clubs
|
|
$
|
319,973
|
|
|
$
|
156,040
|
|
|
$
|
163,933
|
|
|
105.1%
|
|
99.6%
|
Golf Balls
|
|
81,286
|
|
|
53,903
|
|
|
27,383
|
|
|
50.8%
|
|
46.9%
|
Apparel
|
|
91,413
|
|
|
36,302
|
|
|
55,111
|
|
|
151.8%
|
|
144.6%
|
Gear and
Other
|
|
95,516
|
|
|
50,751
|
|
|
44,765
|
|
|
88.2%
|
|
82.5%
|
Venues
|
|
303,424
|
|
|
—
|
|
|
303,424
|
|
|
100.0%
|
|
100.0%
|
Topgolf
Other
|
|
22,029
|
|
|
—
|
|
|
22,029
|
|
|
100.0%
|
|
100.0%
|
Total net
revenue
|
|
$
|
913,641
|
|
|
$
|
296,996
|
|
|
$
|
616,645
|
|
|
207.6%
|
|
201.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Calculated by applying 2020
exchange rates to 2021 reported sales in regions outside the
U.S.
|
(2) On March 8, 2021, the Company
completed its merger with Topgolf. Accordingly, the Company's
revenue categories for 2021 were expanded to include Topgolf's
revenue categories.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by
Region
|
|
|
Three Months
Ended
June
30,
|
|
Growth
|
|
Non-GAAP
Constant
Currency
vs.
2020(1)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
642,757
|
|
|
$
|
171,714
|
|
|
$
|
471,043
|
|
|
274.3%
|
|
274.3%
|
Europe
|
|
120,999
|
|
|
50,074
|
|
|
70,925
|
|
|
141.6%
|
|
118.7%
|
Japan
|
|
61,861
|
|
|
24,640
|
|
|
37,221
|
|
|
151.1%
|
|
155.3%
|
Rest of
World
|
|
88,024
|
|
|
50,568
|
|
|
37,456
|
|
|
74.1%
|
|
58.5%
|
Total net
revenue
|
|
$
|
913,641
|
|
|
$
|
296,996
|
|
|
$
|
616,645
|
|
|
207.6%
|
|
201.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Calculated by applying 2020
exchange rates to 2021 reported sales in regions outside the
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
|
Three Months
Ended
June
30,
|
|
Growth
|
|
Non-GAAP
Constant
Currency
vs.
2020(1)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Golf
Equipment
|
|
$
|
401,259
|
|
|
$
|
209,943
|
|
|
$
|
191,316
|
|
|
91.1%
|
|
86.1%
|
Apparel, Gear and
Other
|
|
186,929
|
|
|
87,053
|
|
|
99,876
|
|
|
114.7%
|
|
108.4%
|
Topgolf
|
|
325,453
|
|
|
$
|
—
|
|
|
325,453
|
|
|
100.0%
|
|
100.0%
|
Total net
revenue
|
|
$
|
913,641
|
|
|
$
|
296,996
|
|
|
$
|
616,645
|
|
|
207.6%
|
|
201.5%
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
Golf
Equipment
|
|
$
|
98,089
|
|
|
$
|
29,181
|
|
|
$
|
68,908
|
|
|
236.1%
|
|
|
Apparel, Gear and
Other
|
|
15,668
|
|
|
(11,711)
|
|
|
27,379
|
|
|
233.8%
|
|
|
Topgolf
|
|
24,204
|
|
|
—
|
|
|
24,204
|
|
|
100.0%
|
|
|
Total segment
operating income
|
|
137,961
|
|
|
17,470
|
|
|
120,491
|
|
|
689.7%
|
|
|
Corporate G&A and
other(2)
|
|
(30,692)
|
|
|
(20,650)
|
|
|
(10,042)
|
|
|
-48.6%
|
|
|
Goodwill and tradename
impairment(3)
|
|
—
|
|
|
(174,269)
|
|
|
174,269
|
|
|
100.0%
|
|
|
Total operating
income (loss)
|
|
107,269
|
|
|
(177,449)
|
|
|
284,718
|
|
|
160.5%
|
|
|
Interest expense,
net
|
|
(28,876)
|
|
|
(12,163)
|
|
|
(16,713)
|
|
|
-137.4%
|
|
|
Other income
(expense), net
|
|
(2,502)
|
|
|
13,997
|
|
|
(16,499)
|
|
|
-117.9%
|
|
|
Total income (loss)
before income taxes
|
|
$
|
75,891
|
|
|
$
|
(175,615)
|
|
|
$
|
251,506
|
|
|
143.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Calculated by applying 2020
exchange rates to 2021 reported sales in regions outside the
U.S.
|
(2) Amount includes corporate general
and administrative expenses not utilized by management in
determining segment profitability, including non-cash
amortization expense for intangible assets acquired in connection
with the Jack Wolfskin, TravisMathew and OGIO acquisitions. In
addition, the amount for 2021 includes (i) $2.5 million of
transaction, transition and other non-recurring costs associated
with the merger with Topgolf completed on March 8, 2021, (ii)
$6.2 million of non-cash amortization expense for intangible
assets acquired in connection with the merger with Topgolf,
combined with depreciation expense from the fair value step-up of
Topgolf property, plant and equipment and amortization expense
related to the fair value adjustments to Topgolf leases, and (iii)
$0.8 million of costs related to the implementation of new IT
systems for Jack Wolfskin. The amount for the second quarter of
2020 includes (i) $3.7 million of severance charges associated with
workforce reductions due to the COVID-19 pandemic, and (ii) $1.8
million of non-recurring costs associated with the Company's
transition to the new North America Distribution Center and costs
related to the implementation of new IT systems for Jack
Wolfskin.
|
(3) Represents an impairment charge
related to Jack Wolfskin recognized in the second quarter of
2020.
|
|
CALLAWAY GOLF
COMPANY
Consolidated Net
Sales and Operating Segment Information
(Unaudited)
(In
thousands)
|
|
|
|
Net Revenues
by Product Category(2)
|
|
|
Six Months
Ended
June
30,
|
|
Growth
|
|
Non-GAAP
Constant
Currency
vs.
2020(1)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Golf Clubs
|
|
$
|
636,326
|
|
|
$
|
407,264
|
|
|
$
|
229,062
|
|
|
56.2%
|
|
52.4%
|
Golf Balls
|
|
141,815
|
|
|
94,340
|
|
|
47,475
|
|
|
50.3%
|
|
46.7%
|
Apparel
|
|
186,703
|
|
|
113,592
|
|
|
73,111
|
|
|
64.4%
|
|
58.3%
|
Gear and
Other
|
|
182,328
|
|
|
124,076
|
|
|
58,252
|
|
|
46.9%
|
|
41.8%
|
Venues
|
|
388,594
|
|
|
—
|
|
|
388,594
|
|
|
100.0%
|
|
100.0%
|
Topgolf
Other
|
|
29,496
|
|
|
—
|
|
|
29,496
|
|
|
100.0%
|
|
100.0%
|
Total net
revenue
|
|
$
|
1,565,262
|
|
|
$
|
739,272
|
|
|
$
|
825,990
|
|
|
111.7%
|
|
107.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Calculated by applying 2020
exchange rates to 2021 reported sales in regions outside the
U.S.
|
(2) On March 8, 2021, the Company
completed its merger with Topgolf. Accordingly, the Company's
revenue categories for 2021 were expanded to include Topgolf's
revenue categories.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by
Region
|
|
|
Six Months
Ended
June
30,
|
|
Growth
|
|
Non-GAAP
Constant
Currency
vs.
2020(1)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
1,030,979
|
|
|
$
|
389,217
|
|
|
$
|
641,762
|
|
|
164.9%
|
|
164.9%
|
Europe
|
|
229,344
|
|
|
146,793
|
|
|
82,551
|
|
|
56.2%
|
|
42.5%
|
Japan
|
|
133,747
|
|
|
101,987
|
|
|
31,760
|
|
|
31.1%
|
|
30.5%
|
Rest of
World
|
|
171,192
|
|
|
101,275
|
|
|
69,917
|
|
|
69.0%
|
|
55.2%
|
Total net
revenue
|
|
$
|
1,565,262
|
|
|
$
|
739,272
|
|
|
$
|
825,990
|
|
|
111.7%
|
|
107.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Calculated by applying 2020
exchange rates to 2021 reported sales in regions outside the
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
|
Six Months
Ended
June
30,
|
|
Growth
|
|
Non-GAAP
Constant
Currency
vs.
2020(1)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Golf
Equipment
|
|
$
|
778,141
|
|
|
$
|
501,604
|
|
|
$
|
276,537
|
|
|
55.1%
|
|
51.3%
|
Apparel, Gear and
Other
|
|
369,031
|
|
|
237,668
|
|
|
131,363
|
|
|
55.3%
|
|
49.7%
|
Topgolf
|
|
418,090
|
|
|
$
|
—
|
|
|
418,090
|
|
|
100.0%
|
|
100.0%
|
Total net
revenue
|
|
$
|
1,565,262
|
|
|
$
|
739,272
|
|
|
$
|
825,990
|
|
|
111.7%
|
|
107.0%
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
Golf
Equipment
|
|
$
|
183,010
|
|
|
$
|
87,801
|
|
|
$
|
95,209
|
|
|
108.4%
|
|
|
Apparel, Gear and
Other
|
|
36,158
|
|
|
(15,510)
|
|
|
51,668
|
|
|
333.1%
|
|
|
Topgolf
|
|
28,158
|
|
|
—
|
|
|
28,158
|
|
|
100.0%
|
|
|
Total segment
operating income
|
|
247,326
|
|
|
72,291
|
|
|
175,035
|
|
|
242.1%
|
|
|
Corporate G&A and
other(2)
|
|
(63,958)
|
|
|
(34,791)
|
|
|
(29,167)
|
|
|
83.8%
|
|
|
Goodwill and tradename
impairment(3)
|
|
—
|
|
|
(174,269)
|
|
|
174,269
|
|
|
100.0%
|
|
|
Total operating
income (loss)
|
|
183,368
|
|
|
(136,769)
|
|
|
320,137
|
|
|
234.1%
|
|
|
Gain on Topgolf
investment(4)
|
|
252,531
|
|
|
—
|
|
|
252,531
|
|
|
100.0%
|
|
|
Interest expense,
net
|
|
(46,333)
|
|
|
(21,278)
|
|
|
(25,055)
|
|
|
-117.8%
|
|
|
Other income,
net
|
|
6,529
|
|
|
20,477
|
|
|
(13,948)
|
|
|
-68.1%
|
|
|
Total income before
income (loss) taxes
|
|
$
|
396,095
|
|
|
$
|
(137,570)
|
|
|
$
|
533,665
|
|
|
387.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Calculated by applying 2020
exchange rates to 2021 reported sales in regions outside the
U.S.
|
(2) Amount includes corporate general
and administrative expenses not utilized by management in
determining segment profitability, including non-cash
amortization expense for intangible assets acquired in connection
with the Jack Wolfskin, TravisMathew and OGIO acquisitions. In
addition, the amount for 2021 includes (i) $18.7 million of
transaction, transition and other non-recurring costs associated
with the merger with Topgolf completed on March 8, 2021, (ii)
$8.4 million of non-cash amortization expense for intangible
assets acquired in connection with the merger with Topgolf,
combined with depreciation expense from the fair value step-up of
Topgolf property, plant and equipment and amortization
expense related to the fair value adjustments to Topgolf leases,
and (iii) $1.5 million of costs related to the implementation
of new IT systems for Jack Wolfskin. The amount for 2020 also
includes (i) $3.4 million of non-recurring costs associated with
the Company's transition to the new North America Distribution
Center, as well as costs related to the implementation of new IT
systems for Jack Wolfskin, and (ii) $3.7 million of severance
charges associated with workforce reductions due to the COVID-19
pandemic.
|
(3) Represents an impairment charge
related to Jack Wolfskin recognized in the second quarter of
2020.
|
(4) Amount represents a gain recorded
to write-up the Company's former investment in Topgolf to its fair
value in connection with the merger.
|
CALLAWAY GOLF
COMPANY
Consolidated Net
Sales and Operating Segment Information
(Unaudited)
(In
thousands)
|
|
|
|
Operating Segment
Information
|
|
|
Three Months
Ended
June
30,
|
|
Growth
|
|
Six Months
Ended
June
30,
|
|
Growth
|
|
|
2021
|
|
2019
|
|
Dollars
|
|
Percent
|
|
2021
|
|
2019
|
|
Dollars
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf
Equipment
|
|
$
|
401,259
|
|
|
$
|
292,353
|
|
|
$
|
108,906
|
|
|
37.3%
|
|
$
|
778,141
|
|
|
$
|
615,972
|
|
|
$
|
162,169
|
|
|
26.3%
|
Apparel, Gear and
Other
|
|
186,929
|
|
|
154,355
|
|
|
32,574
|
|
|
21.1%
|
|
369,031
|
|
|
346,933
|
|
|
22,098
|
|
|
6.4%
|
Topgolf
|
|
325,453
|
|
|
—
|
|
|
325,453
|
|
|
100.0%
|
|
418,090
|
|
|
—
|
|
|
418,090
|
|
|
100.0%
|
Total net
revenue
|
|
$
|
913,641
|
|
|
$
|
446,708
|
|
|
$
|
466,933
|
|
|
104.5%
|
|
$
|
1,565,262
|
|
|
$
|
962,905
|
|
|
$
|
602,357
|
|
|
62.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf
Equipment
|
|
$
|
98,089
|
|
|
$
|
55,665
|
|
|
$
|
42,424
|
|
|
76.2%
|
|
$
|
183,010
|
|
|
$
|
125,658
|
|
|
$
|
57,352
|
|
|
45.6%
|
Apparel, Gear and
Other
|
|
15,668
|
|
|
11,314
|
|
|
4,354
|
|
|
38.5%
|
|
36,158
|
|
|
34,033
|
|
|
2,125
|
|
|
6.2%
|
Topgolf
|
|
24,204
|
|
|
—
|
|
|
24,204
|
|
|
100.0%
|
|
28,158
|
|
|
—
|
|
|
28,158
|
|
|
100.0%
|
Total segment
operating income
|
|
137,961
|
|
|
66,979
|
|
|
70,982
|
|
|
106.0%
|
|
247,326
|
|
|
159,691
|
|
|
87,635
|
|
|
54.9%
|
Corporate G&A and
other(1)
|
|
(30,692)
|
|
|
(21,780)
|
|
|
(8,912)
|
|
|
-40.9%
|
|
(63,958)
|
|
|
(44,856)
|
|
|
(19,102)
|
|
|
-42.6%
|
Total operating
income
|
|
107,269
|
|
|
45,199
|
|
|
62,070
|
|
|
137.3%
|
|
183,368
|
|
|
114,835
|
|
|
68,533
|
|
|
59.7%
|
Gain on Topgolf
investment(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—%
|
|
252,531
|
|
|
—
|
|
|
252,531
|
|
|
100.0%
|
Interest expense,
net
|
|
(28,876)
|
|
|
(10,260)
|
|
|
(18,616)
|
|
|
-181.4%
|
|
(46,333)
|
|
|
(19,899)
|
|
|
(26,434)
|
|
|
-132.8%
|
Other
income/(expense), net
|
|
(2,502)
|
|
|
1,167
|
|
|
(3,669)
|
|
|
-314.4%
|
|
6,529
|
|
|
(773)
|
|
|
7,302
|
|
|
944.6%
|
Total income before
income taxes
|
|
$
|
75,891
|
|
|
$
|
36,106
|
|
|
$
|
39,785
|
|
|
110.2%
|
|
$
|
396,095
|
|
|
$
|
94,163
|
|
|
$
|
301,932
|
|
|
320.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amount includes corporate general
and administrative expenses not utilized by management in
determining segment profitability including non-cash amortization
expense for intangible assets acquired in connection with the Jack
Wolfskin, TravisMathew and OGIO acquisitions. In addition, the
amount for the three and six months ended June 30, 2021 includes
(i) $2.5 million and $18.7 million, respectively, for
transaction, transition and other non-recurring costs associated
with the merger with Topgolf, (ii) $6.2 million and
$8.4 million, respectively, of non-cash amortization expense
for intangible assets acquired in connection with the merger with
Topgolf, combined with depreciation expense from the fair value
step-up of Topgolf property, plant and equipment and
amortization expense related to the fair value adjustments to
Topgolf leases, and (iii) $0.8 million and $1.5 million,
respectively, of expenses related to the implementation of new IT
systems for Jack Wolfskin. The amount for three and six months
ended June 30, 2019 also includes (i) $5.3 million and $10.7
million, respectively, of amortization expense related to the fair
value adjustment to Jack Wolfskin's inventory, and (ii) $1.4
million and $6.1 million, respectively, for transaction costs
associated with the acquisition of Jack Wolfskin.
|
(2) Amount represents a gain recorded
to write up the Company's former investment in Topgolf to its fair
value in connection with the merger.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CALLAWAY GOLF
COMPANY
Supplemental
Financial Information and Non-GAAP Reconciliation
(Unaudited)
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
2021
|
|
2020
|
|
GAAP
|
|
Non-Cash
Amortization
and
Depreciation(1)
|
|
Non-Cash
Amortization
of Discount
on Convertible
Notes(2)
|
|
Acquisition
& Other
Non-Recurring
Items(3)
|
|
Tax
Valuation
Allowance(4)
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-Cash
Amortization
and
Impairment
Charges(1)
|
|
Non-Cash
Amortization
of Discount
on Convertible
Notes(2)
|
|
Other
Non-Recurring
Items(3)
|
|
Non-
GAAP(5)
|
Net
revenues
|
$
|
913,641
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
913,641
|
|
|
$
|
296,996
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
296,996
|
|
Total costs and
expenses
|
806,372
|
|
|
7,453
|
|
|
—
|
|
|
3,274
|
|
|
—
|
|
|
795,645
|
|
|
474,445
|
|
|
175,447
|
|
|
—
|
|
|
5,889
|
|
|
293,109
|
|
Income (loss) from
operations
|
107,269
|
|
|
(7,453)
|
|
|
—
|
|
|
(3,274)
|
|
|
—
|
|
|
117,996
|
|
|
(177,449)
|
|
|
(175,447)
|
|
|
—
|
|
|
(5,889)
|
|
|
3,887
|
|
Other
income/(expense), net
|
(31,378)
|
|
|
(1,459)
|
|
|
(2,598)
|
|
|
(306)
|
|
|
—
|
|
|
(27,015)
|
|
|
1,834
|
|
|
—
|
|
|
(1,499)
|
|
|
—
|
|
|
3,333
|
|
Income tax provision
(benefit)
|
(15,853)
|
|
|
(2,139)
|
|
|
(624)
|
|
|
(859)
|
|
|
(32,743)
|
|
|
20,512
|
|
|
(7,931)
|
|
|
(8,195)
|
|
|
(345)
|
|
|
(1,355)
|
|
|
1,964
|
|
Net income
(loss)
|
$
|
91,744
|
|
|
$
|
(6,773)
|
|
|
$
|
(1,974)
|
|
|
$
|
(2,721)
|
|
|
$
|
32,743
|
|
|
$
|
70,469
|
|
|
$
|
(167,684)
|
|
|
$
|
(167,252)
|
|
|
$
|
(1,154)
|
|
|
$
|
(4,534)
|
|
|
$
|
5,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$0.47
|
|
|
($0.03)
|
|
|
($0.01)
|
|
|
($0.02)
|
|
|
$0.17
|
|
|
$0.36
|
|
|
($1.78)
|
|
|
($1.78)
|
|
|
($0.01)
|
|
|
($0.05)
|
|
|
$0.06
|
|
Weighted-average
shares outstanding:
|
194,334
|
|
|
194,334
|
|
|
194,334
|
|
|
194,334
|
|
|
194,334
|
|
|
194,334
|
|
|
94,141
|
|
|
94,141
|
|
|
94,141
|
|
|
94,141
|
|
|
95,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents non-cash amortization
expense of intangible assets in connection with the acquisitions of
OGIO, TravisMathew and Jack Wolfskin. 2021 also includes non-cash
amortization of Topgolf intangible assets, depreciation expense
from the fair value step-up of Topgolf property, plant and
equipment and amortization expense related to the fair value
adjustments to Topgolf leases and Topgolf debt, all recorded in
connection with the Topgolf merger. 2020 also includes an
impairment charge of $174.3 million related to Jack Wolfskin
intangibles.
|
(2) Represents the non-cash
amortization of the debt discount on the Company's convertible
notes issued in May 2020.
|
(3) Acquisition and other
non-recurring items in 2021 include transaction, transition and
non-recurring costs associated with the Topgolf merger and costs
related to the implementation of new IT systems for Jack Wolfskin.
In 2020, non-recurring items include costs associated with the
Company's transition to its new North America Distribution Center,
implementation costs related to new IT systems for Jack Wolfskin,
and severance charges associated with workforce reductions due to
the COVID-19 pandemic.
|
(4) Represents the release of a
portion of the valuation allowance attributable to certain Topgolf
net operating losses.
|
(5)
Non-GAAP diluted earnings per share for the three months ended June
30, 2020 was calculated using the diluted weighted average
outstanding shares, as earnings on a non-GAAP basis resulted in net
income after giving effect to pro forma adjustments.
|
CALLAWAY GOLF
COMPANY
Supplemental
Financial Information and Non-GAAP Reconciliation
(Unaudited)
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
GAAP
|
|
Non-Cash
Amortization
and
Depreciation(1)
|
|
Non-Cash
Amortization
of Discount
on Convertible
Notes(2)
|
|
Acquisition
& Other
Non-Recurring
Items(3)
|
|
Tax
Valuation
Allowance(4)
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-Cash
Amortization
and
Impairment
Charges(1)
|
|
Non-Cash
Amortization
of Discount
on Convertible Notes(2)
|
|
Other
Non-Recurring
Items(3)
|
|
Non-
GAAP(5)
|
Net
revenues
|
$
|
1,565,262
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,565,262
|
|
|
$
|
739,272
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
739,272
|
|
Total costs and
expenses
|
1,381,894
|
|
|
10,966
|
|
|
—
|
|
|
20,211
|
|
|
—
|
|
|
1,350,717
|
|
|
876,041
|
|
|
176,626
|
|
|
—
|
|
|
7,438
|
|
|
691,977
|
|
Income (loss) from
operations
|
183,368
|
|
|
(10,966)
|
|
|
—
|
|
|
(20,211)
|
|
|
—
|
|
|
214,545
|
|
|
(136,769)
|
|
|
(176,626)
|
|
|
—
|
|
|
(7,438)
|
|
|
47,295
|
|
Other
income/(expense), net
|
212,727
|
|
|
(1,752)
|
|
|
(5,133)
|
|
|
252,126
|
|
|
—
|
|
|
(32,514)
|
|
|
(801)
|
|
|
—
|
|
|
(1,499)
|
|
|
—
|
|
|
698
|
|
Income tax provision
(benefit)
|
31,890
|
|
|
(3,052)
|
|
|
(1,232)
|
|
|
(4,948)
|
|
|
6,184
|
|
|
34,938
|
|
|
1,220
|
|
|
(8,466)
|
|
|
(345)
|
|
|
(1,711)
|
|
|
11,742
|
|
Net income
(loss)
|
$
|
364,205
|
|
|
$
|
(9,666)
|
|
|
$
|
(3,901)
|
|
|
$
|
236,863
|
|
|
$
|
(6,184)
|
|
|
$
|
147,093
|
|
|
$
|
(138,790)
|
|
|
$
|
(168,160)
|
|
|
$
|
(1,154)
|
|
|
$
|
(5,727)
|
|
|
$
|
36,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$2.28
|
|
|
($0.06)
|
|
|
($0.02)
|
|
|
$1.48
|
|
|
($0.04)
|
|
|
$0.92
|
|
|
($1.47)
|
|
|
($1.78)
|
|
|
($0.01)
|
|
|
($0.06)
|
|
|
$0.38
|
|
Weighted-average
shares outstanding:
|
159,639
|
|
|
159,639
|
|
|
159,639
|
|
|
159,639
|
|
|
159,639
|
|
|
159,639
|
|
|
94,225
|
|
|
94,225
|
|
|
94,225
|
|
|
94,225
|
|
|
94,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents non-cash amortization
expense of intangible assets in connection with the acquisitions of
OGIO, TravisMathew and Jack Wolfskin. 2021 also includes non-cash
amortization of Topgolf intangible assets, depreciation expense
from the fair value step-up of Topgolf property, plant and
equipment and expense related to the fair value adjustments to
Topgolf leases and Topgolf debt, all recorded in connection with
the Topgolf merger. 2020 also includes an impairment charge of
$174.3 million related to Jack Wolfskin.
|
(2) Represents the non-cash
amortization of the debt discount on the Company's convertible
notes issued in May 2020.
|
(3) Acquisition and other
non-recurring items in 2021 includes transaction, transition and
other non-recurring costs associated with the merger with Topgolf
completed on March 8, 2021, the recognition of a $252.5 million
gain on the Company's pre-merger investment in Topgolf, and
expenses related to the implementation of new IT systems for Jack
Wolfskin. 2020 includes costs associated with the Company's
transition to it's new North America Distribution Center, in
addition to implementation costs related to new IT systems for Jack
Wolfskin, and severance charges associated with workforce
reductions due to the COVID-19 pandemic.
|
(4) Amount
represents the net impact of changes in the Company's valuation
allowance against certain of its deferred tax assets.
|
(5)
Non-GAAP diluted earnings per share for the six months ended
June 30, 2020 was calculated using the diluted weighted average
outstanding shares, as earnings on a non-GAAP basis resulted in net
income after giving effect to pro forma adjustments.
|
CALLAWAY GOLF
COMPANY
Non-GAAP
Reconciliation and Supplemental Financial
Information
(Unaudited)
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 Trailing
Twelve Month Adjusted EBITDA
|
|
2020 Trailing
Twelve Month Adjusted EBITDA
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
September
30,
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
|
|
September
30,
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
|
|
2020
|
|
2020
|
|
2021
|
|
2021
|
|
Total
|
|
2019
|
|
2019
|
|
2020
|
|
2020
|
|
Total
|
Net income
(loss)
|
$
|
52,432
|
|
|
$
|
(40,576)
|
|
|
$
|
272,461
|
|
|
$
|
91,744
|
|
|
$
|
376,061
|
|
|
$
|
31,048
|
|
|
$
|
(29,218)
|
|
|
$
|
28,894
|
|
|
$
|
(167,684)
|
|
|
$
|
(136,960)
|
|
Interest expense,
net
|
12,727
|
|
|
12,927
|
|
|
17,457
|
|
|
28,876
|
|
|
71,987
|
|
|
9,545
|
|
|
9,049
|
|
|
9,115
|
|
|
12,163
|
|
|
39,872
|
|
Income tax provision
(benefit)
|
5,360
|
|
|
(7,124)
|
|
|
47,743
|
|
|
(15,853)
|
|
|
30,126
|
|
|
2,128
|
|
|
(2,352)
|
|
|
9,151
|
|
|
(7,931)
|
|
|
996
|
|
Depreciation and
amortization expense
|
10,311
|
|
|
10,840
|
|
|
20,272
|
|
|
43,270
|
|
|
84,693
|
|
|
8,472
|
|
|
9,480
|
|
|
8,997
|
|
|
9,360
|
|
|
36,309
|
|
JW goodwill and trade
name impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
174,269
|
|
|
174,269
|
|
Non-cash stock
compensation expense
|
3,263
|
|
|
2,861
|
|
|
4,609
|
|
|
11,039
|
|
|
21,772
|
|
|
2,513
|
|
|
3,418
|
|
|
1,861
|
|
|
2,942
|
|
|
10,734
|
|
Non-cash lease
amortization expense
|
(99)
|
|
|
(76)
|
|
|
872
|
|
|
2,103
|
|
|
2,800
|
|
|
(36)
|
|
|
(120)
|
|
|
264
|
|
|
207
|
|
|
315
|
|
Acquisitions &
other non-recurring costs, before taxes(1)
|
2,858
|
|
|
8,607
|
|
|
(235,594)
|
|
|
3,274
|
|
|
(220,855)
|
|
|
3,009
|
|
|
4,090
|
|
|
1,516
|
|
|
5,856
|
|
|
14,471
|
|
Adjusted
EBITDA
|
$
|
86,852
|
|
|
$
|
(12,541)
|
|
|
$
|
127,820
|
|
|
$
|
164,453
|
|
|
$
|
366,584
|
|
|
$
|
56,679
|
|
|
$
|
(5,653)
|
|
|
$
|
59,798
|
|
|
$
|
29,182
|
|
|
$
|
140,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In 2021, amounts include
transaction, transition and other non-recurring costs associated
with the merger with Topgolf completed on March 8, 2021, the
recognition of a $252.5 million gain to step-up the Company's
former investment in Topgolf to its fair value in connection with
the merger, and expenses related to the implementation of new IT
systems for Jack Wolfskin. In 2020, amounts include costs
associated with the Company's transition to its new North America
Distribution Center and the implementation of new IT systems for
Jack Wolfskin, as well as $4.8 million of severance related to the
Company's cost reduction initiatives.
|
CALLAWAY GOLF
COMPANY
Non-GAAP
Reconciliation and Supplemental Financial
Information
(Unaudited)
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
2019 Trailing
Twelve Month Adjusted EBITDA
|
|
Quarter
Ended
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
Total
|
Net income
(loss)
|
$
|
48,647
|
|
|
$
|
28,931
|
|
|
$
|
31,048
|
|
|
$
|
(29,218)
|
|
|
$
|
79,408
|
|
Interest expense,
net
|
9,639
|
|
|
10,260
|
|
|
9,545
|
|
|
9,049
|
|
|
38,493
|
|
Income tax provision
(benefit)
|
9,556
|
|
|
7,208
|
|
|
2,128
|
|
|
(2,352)
|
|
|
16,540
|
|
Depreciation and
amortization expense
|
7,977
|
|
|
9,022
|
|
|
8,472
|
|
|
9,480
|
|
|
34,951
|
|
Non-cash stock
compensation expense
|
3,435
|
|
|
3,530
|
|
|
2,513
|
|
|
3,418
|
|
|
12,896
|
|
Non-cash lease
amortization expense
|
(140)
|
|
|
(9)
|
|
|
(36)
|
|
|
(120)
|
|
|
(305)
|
|
Acquisitions &
other non-recurring costs, before taxes(1)
|
13,986
|
|
|
6,939
|
|
|
3,009
|
|
|
4,090
|
|
|
28,024
|
|
Adjusted
EBITDA
|
$
|
93,100
|
|
|
$
|
65,881
|
|
|
$
|
56,679
|
|
|
$
|
(5,653)
|
|
|
$
|
210,007
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Acquisitions and other
non-recurring costs for the year ended December 31, 2019, include
(i) $4.7 million of transaction costs associated with the
acquisition of Jack Wolfskin, including banker's fees, legal fees,
consulting and travel expenses; (ii) $5.5 million of costs
associated with transitioning and reporting on the Jack Wolfskin
business, including consulting fees, audit fees for SEC reporting
requirements and valuation services associated with preparing Jack
Wolfskin's opening balance sheet; (iii) the recognition of a $3.9
million foreign currency exchange loss primarily related to the
re-measurement of a foreign currency contract established to
mitigate the risk of foreign currency fluctuations on the purchase
price of Jack Wolfskin, which was denominated in Euros; and (iv)
consulting fees to address an activist investor. These amounts
exclude any depreciation or amortization, which has been presented
in a separate line above.
|
CALLAWAY GOLF
COMPANY
2021 Adjusted
EBITDA Guidance
(Unaudited)
(In
millions)
|
|
|
Three Months
Ended
September 30, 2021
|
|
Twelve Months
Ended
December 31, 2021
|
|
|
|
|
Net (loss)
income
|
$(32) -
$(38)
|
|
$196 -
$209
|
|
|
|
|
Adjusted
EBITDA(1)
|
$51 - $58
|
|
$345 -
$360
|
|
|
|
|
|
(1) Adjusted EBITDA excludes the
following from forecasted net income: Interest expense, taxes,
depreciation and amortization expense, non-cash stock compensation
expense, non-cash lease amortization expense, transaction and
transition costs associated with the merger with Topgolf completed
on March 8, 2021, the recognition of a $252.5 million gain to
step-up the Company's former investment in Topgolf to its fair
value in connection with the merger, and expenses related to the
implementation of new IT systems for Jack Wolfskin.
|
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SOURCE Callaway Golf Company