HIGHLIGHTS
- Topgolf continues to drive efficiencies and delivered strong
venue-level margins.
- On-course golf participation and engagement remain strong; and
Callaway sustained its strong U.S. market share including #1
year-to-date in Woods, Drivers, Fairway Woods, Hybrids, and Irons,
as well as its brand position as a leader in Technology and
Innovation.
- Topgolf remains on plan to open 11 new venues in the U.S. this
year, with 7 venues open year-to-date.
- TravisMathew and Jack Wolfskin delivered solid growth.
- Both total Company and Topgolf remain on track to be free cash
flow positive in 2023.
CARLSBAD, Calif., Nov. 8, 2023
/PRNewswire/ -- Topgolf Callaway Brands Corp. (the "Company" or
"Topgolf Callaway Brands") (NYSE: MODG) announced its financial
results for the third quarter ended September 30, 2023.
"This quarter our team once again delivered solid operating
results across all segments of our business. Both Golf
Equipment and Active Lifestyle had strong quarters while Topgolf,
despite same venue sales that were lower than expected, was able to
expand venue margins, an impressive accomplishment in a challenging
quarter, and remains on track to successfully open 11 new venues in
2023," commented Chip Brewer,
President and Chief Executive Officer of Topgolf Callaway
Brands. "With current same venue sales trends and foreign
exchange rates, we are lowering our forward guidance and taking
decisive action to lower both costs as well as capital expenditures
and to drive additional synergies across our business. All of
this is aimed at de-risking future performance while maintaining
our strong growth prospects. We remain on plan to deliver
positive free cash flow for the total Company and Topgolf this year
and we are confident that we will continue to profitably grow our
business this year and going forward."
CONSOLIDATED RESULTS
The Company announced the following GAAP and non-GAAP financial
results for the three and nine months ended September 30, 2023 and 2022:
|
GAAP
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except
percentages and
per share data)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
Net revenues
|
$
1,040.6
|
|
$ 988.5
|
|
$
52.1
|
|
5.3 %
|
|
$
3,387.7
|
|
$
3,144.4
|
|
$ 243.3
|
|
7.7 %
|
|
Income from
operations
|
73.8
|
|
68.2
|
|
5.6
|
|
8.2 %
|
|
270.3
|
|
291.5
|
|
(21.2)
|
|
(7.3) %
|
|
Other expense,
net
|
(47.1)
|
|
(29.4)
|
|
(17.7)
|
|
60.2 %
|
|
(151.2)
|
|
(73.4)
|
|
(77.8)
|
|
106.0 %
|
|
Income before
taxes
|
26.7
|
|
38.8
|
|
(12.1)
|
|
(31.2) %
|
|
119.1
|
|
218.1
|
|
(99.0)
|
|
(45.4) %
|
|
Income tax (benefit)
provision
|
(3.0)
|
|
0.3
|
|
(3.3)
|
|
n/m
|
|
(53.0)
|
|
(12.5)
|
|
(40.5)
|
|
n/m
|
|
Net income
|
$ 29.7
|
|
$ 38.5
|
|
$
(8.8)
|
|
(22.9) %
|
|
$ 172.1
|
|
$ 230.6
|
|
$ (58.5)
|
|
(25.4) %
|
|
Earnings per share -
diluted
|
$ 0.16
|
|
$ 0.20
|
|
$ (0.04)
|
|
(20.0) %
|
|
$ 0.88
|
|
$ 1.17
|
|
$ (0.29)
|
|
(24.8) %
|
NON-GAAP RESULTS
Non-GAAP results exclude certain non-recurring and non-cash
adjustments as defined in the Additional Information and
Disclosures section of this release. The Company has also provided
a reconciliation of the non-GAAP information to the most directly
comparable GAAP information in the tables to this release.
|
(in millions,
except
percentages and per share
data)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
Constant
Currency
vs.
2022
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
Constant
Currency
vs.
2022
|
|
Net revenues
|
$
1,040.6
|
|
$
988.5
|
|
$
52.1
|
|
5.3 %
|
|
4.6 %
|
|
$
3,387.7
|
|
$
3,144.4
|
|
$
243.3
|
|
7.7 %
|
|
8.7 %
|
|
Income from
operations
|
85.2
|
|
81.1
|
|
4.1
|
|
5.1 %
|
|
1.0 %
|
|
306.7
|
|
322.2
|
|
(15.5)
|
|
(4.8) %
|
|
1.0 %
|
|
Other expense,
net
|
(47.1)
|
|
(28.1)
|
|
(19.0)
|
|
67.6 %
|
|
|
|
(139.8)
|
|
(69.7)
|
|
(70.1)
|
|
100.6 %
|
|
|
|
Income before
taxes
|
38.1
|
|
53.0
|
|
(14.9)
|
|
(28.1) %
|
|
|
|
166.9
|
|
252.5
|
|
(85.6)
|
|
(33.9) %
|
|
|
|
Income tax (benefit)
provision
|
(0.1)
|
|
8.4
|
|
(8.5)
|
|
(101.2) %
|
|
|
|
17.7
|
|
43.5
|
|
(25.8)
|
|
(59.3) %
|
|
|
|
Net income
|
$
38.2
|
|
$
44.6
|
|
$ (6.4)
|
|
(14.3) %
|
|
|
|
$
149.2
|
|
$
209.0
|
|
$
(59.8)
|
|
(28.6) %
|
|
|
|
Earnings per share -
diluted
|
$
0.20
|
|
$
0.23
|
|
$
(0.03)
|
|
(13.0) %
|
|
|
|
$
0.77
|
|
$
1.06
|
|
$
(0.29)
|
|
(27.4) %
|
|
|
|
Adjusted
EBITDA
|
$
163.3
|
|
$
144.4
|
|
$
18.9
|
|
13.1 %
|
|
10.8 %
|
|
$
526.8
|
|
$
521.5
|
|
$ 5.3
|
|
1.0 %
|
|
4.6 %
|
THIRD QUARTER 2023 CONSOLIDATED RESULTS COMMENTARY
(All comparisons to prior periods are calculated on a
year-over-year basis, unless otherwise noted)
The Company reported solid financial results for the third
quarter. Net revenues grew 5.3%, or 4.6% on a constant currency
basis, driven by continued growth at Topgolf and momentum in Active
Lifestyle.
Income from operations increased 8.2% on a GAAP basis. On a
non-GAAP basis income from operations increased 5.1% or 1.0%
on a constant currency basis.
Net income decreased 22.9% on a GAAP basis. On a non-GAAP basis
net income decreased 14.3%. This performance includes a
$17.2 million increase in interest
expense related to higher interest rates, additional term loan debt
and increased venue financing interest.
Adjusted EBITDA grew 13.1% or 10.8% on a constant currency basis
driven primarily by increased revenues and operational efficiencies
at Topgolf.
SEGMENT RESULTS
SEGMENT NET REVENUES
The table below provides net revenues by segment for the three
and nine months ended September 30,
2023 and 2022:
|
(in millions,
except
percentages)
|
Three Months Ended
September 30,
|
|
Non-GAAP
Constant
Currency
vs.
2022(1)
|
|
Nine Months Ended
September 30,
|
|
Non-GAAP
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
%
Change
|
|
%
Change
|
|
2023
|
|
2022
|
|
%
Change
|
|
%
Change
|
|
Topgolf
|
$
447.7
|
|
$
413.8
|
|
8.2 %
|
|
7.9 %
|
|
$
1,322.0
|
|
$
1,139.5
|
|
16.0 %
|
|
16.1 %
|
|
Golf
Equipment
|
293.4
|
|
296.7
|
|
(1.1) %
|
|
(1.5) %
|
|
1,188.1
|
|
1,216.6
|
|
(2.3) %
|
|
(0.6) %
|
|
Active
Lifestyle
|
299.5
|
|
278.0
|
|
7.7 %
|
|
6.2 %
|
|
877.6
|
|
788.3
|
|
11.3 %
|
|
12.4 %
|
|
Net Revenues
|
$
1,040.6
|
|
$
988.5
|
|
5.3 %
|
|
4.6 %
|
|
$
3,387.7
|
|
$
3,144.4
|
|
7.7 %
|
|
8.7 %
|
|
|
|
(1)
|
Calculated by applying
2022 exchange rates to 2023 reported sales in regions outside the
U.S.
|
SEGMENT OPERATING INCOME
The table below provides the breakout of segment operating
income for the three and nine months ended September 30, 2023 and 2022:
|
(in millions, except
percentages)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
Change
|
|
2023
|
|
2022
|
|
Change
|
|
Topgolf
|
$ 38.9
|
|
$ 23.6
|
|
64.8 %
|
|
$ 85.7
|
|
$ 74.3
|
|
15.3 %
|
|
% of segment
revenue
|
8.7 %
|
|
5.7 %
|
|
300
bps
|
|
6.5 %
|
|
6.5 %
|
|
—
bps
|
|
Golf
Equipment
|
35.2
|
|
49.6
|
|
(29.0) %
|
|
213.2
|
|
250.7
|
|
(15.0) %
|
|
% of segment
revenue
|
12.0 %
|
|
16.7 %
|
|
(470) bps
|
|
17.9 %
|
|
20.6 %
|
|
(270) bps
|
|
Active
Lifestyle
|
40.0
|
|
28.1
|
|
42.3 %
|
|
96.8
|
|
77.3
|
|
25.2 %
|
|
% of segment
revenue
|
13.4 %
|
|
10.1 %
|
|
330
bps
|
|
11.0 %
|
|
9.8 %
|
|
120
bps
|
|
Total Segment Operating
Income
|
$ 114.1
|
|
$ 101.3
|
|
12.6 %
|
|
$ 395.7
|
|
$ 402.3
|
|
(1.6) %
|
|
% of total segment
revenue
|
11.0 %
|
|
10.2 %
|
|
80
bps
|
|
11.7 %
|
|
12.8 %
|
|
(110) bps
|
|
Constant
Currency
Total Segment Operating
Income
|
|
|
|
|
9.4 %
|
|
|
|
|
|
3.0 %
|
THIRD QUARTER 2023 SEGMENT COMMENTARY
(All comparisons to prior periods are calculated on a
year-over-year basis, unless otherwise noted)
Topgolf
- Segment revenue increased $33.9
million or 8.2%, to $447.7
million, driven by new venues, partially offset by
lower-than-expected same venue sales which declined 3%, primarily
due to a post-Covid surge in the corporate events business last
year.
- Segment operating income increased $15.3
million to $38.9 million and
Segment Adjusted EBITDA increased $26.7
million (or 41.6%) to $90.9
million due to increased revenues and improved operational
efficiencies in the venues.
Golf Equipment
- Segment revenue decreased $3.3
million or 1.1% (1.5% decrease on a constant currency basis)
to $293.4 million, primarily due to
an expected shift in timing of golf club launches from Q3 2023 to
Q4 2023 as well as a decrease in golf ball sales due to a
post-Covid inventory fill-in at retail in Q3 2022 and was partially
offset by an increase in pricing.
- Segment operating income decreased $14.4
million (or 29.0%) due to less product launching in Q3, a
return to more normalized promotional levels and lower unit volumes
resulting in unfavorable cost absorption.
Active Lifestyle
- Segment revenue increased $21.5
million or 7.7% (6.2% increase on a constant currency basis)
to $299.5 million, primarily due to
strong double-digit growth at TravisMathew, including new store
openings, as well as growth at Jack Wolfskin.
- Segment operating income increased $11.9
million (or 42.3%) driven by increases in revenue and gross
margin, related to a higher mix of direct-to-consumer business and
lower freight costs.
The following is a reconciliation of total segment operating
income to income before income taxes for the three and nine months
ended September 30, 2023 and
2022:
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(in
millions)
|
2023
|
|
2022
|
|
$
Change
|
|
2023
|
|
2022
|
|
$
Change
|
|
Total segment operating
income:
|
$
114.1
|
|
$
101.3
|
|
$
12.8
|
|
$
395.7
|
|
$
402.3
|
|
$
(6.6)
|
|
Reconciling
items(1)
|
(40.3)
|
|
(33.1)
|
|
(7.2)
|
|
(125.4)
|
|
(110.8)
|
|
(14.6)
|
|
Income from
operations
|
73.8
|
|
68.2
|
|
5.6
|
|
270.3
|
|
291.5
|
|
(21.2)
|
|
Interest expense,
net
|
(52.3)
|
|
(36.4)
|
|
(15.9)
|
|
(153.6)
|
|
(100.3)
|
|
(53.3)
|
|
Other income,
net
|
5.2
|
|
7.0
|
|
(1.8)
|
|
2.4
|
|
26.9
|
|
(24.5)
|
|
Income before income
taxes
|
$
26.7
|
|
$
38.8
|
|
$
(12.1)
|
|
$
119.1
|
|
$
218.1
|
|
$
(99.0)
|
|
|
|
(1)
|
Includes corporate
overhead and certain non-recurring and non-cash items as described
in the schedules to this release.
|
2023 BUSINESS OUTLOOK
The 2023 projections set forth below are based on the Company's
best estimates at this time.
|
FULL YEAR 2023
OUTLOOK
|
|
(in millions, except
where noted otherwise and for percentages and per share
data)
|
|
|
|
|
|
|
|
2023
Current
Estimate
|
|
2023
Previous
Estimate
|
|
2022
Reported
Results
|
|
Consolidated Net
Revenues(1)
|
$4,235 -
$4,260
|
|
$4,420 -
$4,470
|
|
$3,996
|
|
Topgolf
Revenue
|
Approx.
$1,745
|
|
Approx.
$1,900
|
|
$1,549
|
|
Topgolf Same Venue
Sales Growth(2)
|
Down Slightly
%
|
|
Mid-to-High Single
Digit %
|
|
7 %
|
|
Consolidated Adjusted
EBITDA
|
$575 - $585
|
|
$625 - $640
|
|
$558
|
|
Topgolf Adjusted
EBITDA
|
$280 - $290
|
|
$315 - $325
|
|
$235
|
|
Non-GAAP Diluted
Earnings per Share
|
$0.39 -
$0.43
|
|
$0.63 -
$0.69
|
|
$0.82
|
|
Shares
Outstanding
|
Approx. 201
|
|
Approx. 200
|
|
201
|
|
|
|
|
|
|
|
|
(1)
|
2023 Current Estimate
for Consolidated Net Revenues includes a full year negative foreign
exchange impact of approximately $30 million in comparison to
2022.
|
|
(2)
|
Same venue sales growth
for 2022 was measured in comparison to 2019, given the pandemic
impacts in 2020. For 2023, same venue sales growth is measured in
comparison to the prior year, 2022.
|
|
FOURTH QUARTER 2023
OUTLOOK
|
|
|
(in
millions)
|
|
|
|
|
|
Q4
2023
Estimate
|
|
Q4
2022
Reported
Results
|
|
|
Consolidated Net
Revenues
|
$847 - $872
|
|
$851
|
|
|
Consolidated Adjusted
EBITDA
|
$48 - $58
|
|
$37
|
|
|
|
Topgolf expected to
deliver same venue sales growth of down mid-to-high-single-digits
year-over-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, November 8, 2023, to discuss the Company's
financial results, outlook and business. The call will be webcast
live on our investor relations website at
https://www.topgolfcallawaybrands.com/news-and-events/presentations.
A replay of the conference call will be available approximately two
hours after the call ends. The replay may be accessed through the
Investor Relations section of the Company's website at
https://www.topgolfcallawaybrands.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 of
America ("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" or as "constant
currency" results. This information estimates the impact of changes
in foreign currency exchange 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 and
depreciation of acquired intangible assets and purchase accounting
adjustments. For 2023, non-recurring items include legal costs and
credit agency fees relating to, and debt modification costs in
connection with, the 2023 debt refinancing, IT integration and
implementation costs stemming from acquisitions, restructuring and
reorganization charges in our Active Lifestyle segment,
non-recurring IT costs associated with a cybersecurity incident and
the release of tax valuation allowances. For 2022, non-recurring
items include legal costs and credit agency fees related to a
postponed debt refinancing, IT integration and implementation costs
associated with new ERP systems primarily related to the Topgolf
merger and non-cash asset write-downs.
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.
For forward-looking Adjusted EBITDA, non-GAAP diluted earnings
per share, free cash flow, and Topgolf Adjusted EBITDA (together,
the "Projected Non-GAAP Measures") information provided in this
release, reconciliation of such Projected Non-GAAP Measures to the
most closely comparable GAAP financial measures are not provided
because the Company is unable to provide such reconciliation
without unreasonable efforts. The inability to provide a
reconciliation is because the Company is currently unable to
predict with a reasonable degree of certainty the type and extent
of certain items that would be expected to impact net income in the
future but would not impact the Projected Non-GAAP measures. These
items may include certain non-cash depreciation, which will
fluctuate based on the Company's level of capital expenditures,
non-cash amortization of intangibles related to the Company's
acquisitions, income taxes, which can fluctuate based on changes in
the other items noted and/or future forecasts, and other
non-recurring costs and non-cash adjustments. Historically, the
Company has excluded these items from the Projected Non-GAAP
Measures. The Company currently expects to continue to exclude
these items in future disclosures of the Projected Non-GAAP
Measures and may also exclude other items that may arise. The
events that typically lead to the recognition of such adjustments
are inherently unpredictable as to if or when they may occur, and
therefore actual results may differ materially. This unavailable
information could have a significant impact on GAAP financial
measures.
Definitions
Free cash flow. The Company defines free cash flow as
cash flows from operating activities, less capital expenditures net
of proceeds from lease financing and net of proceeds from
government grants.
Same venue sales. The Company 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 in the year of
comparison.
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
its segments') fourth quarter and full year 2023 guidance
(including net revenues, Adjusted EBITDA, Topgolf Adjusted EBITDA,
free cash flow, non-GAAP diluted earnings per share, same venue
sales growth, shares outstanding and Topgolf venue profitability),
performance against long-term financial targets, strength and
demand of the Company's products and services, continued brand
momentum, demand for golf and outdoor activities and apparel,
continued investments in the business, consumer trends and
behavior, future industry and market conditions, foreign currency
effects and their impacts, 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," "would," "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 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; ongoing increases
in operating and freight costs; global supply chain constraints and
challenges; 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. 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, 2022
as well as other risks and uncertainties detailed from time to time
in the Company's reports on Forms 10-K, 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 Topgolf Callaway Brands
Topgolf Callaway Brands Corp. (NYSE: MODG) is an unrivaled
tech-enabled Modern Golf and active lifestyle company delivering
leading golf equipment, apparel, and entertainment, with a
portfolio of global brands including Topgolf, Callaway Golf,
TravisMathew, Toptracer, Odyssey, OGIO, Jack Wolfskin, and World
Golf Tour ("WGT"). "Modern Golf" is the dynamic and inclusive
ecosystem that includes both on-course and off-course golf. For
more information, please visit
https://www.topgolfcallawaybrands.com.
Investor Contact
Katina
Metzidakis
(760) 931-1771
invrelations@tcbrands.com
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
September
30,
2023
|
|
December 31,
2022
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
330.3
|
|
$
180.2
|
|
Restricted
cash
|
0.7
|
|
19.1
|
|
Accounts receivable,
net
|
304.6
|
|
167.3
|
|
Inventories
|
736.5
|
|
959.2
|
|
Other current
assets
|
230.6
|
|
193.1
|
|
Total current
assets
|
1,602.7
|
|
1,518.9
|
|
Property, plant and
equipment, net
|
2,083.1
|
|
1,809.6
|
|
Operating lease
right-of-use assets, net
|
1,414.6
|
|
1,419.1
|
|
Goodwill and intangible
assets, net
|
3,476.7
|
|
3,487.4
|
|
Other assets,
net
|
404.9
|
|
355.4
|
|
Total
assets
|
$
8,982.0
|
|
$
8,590.4
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
386.1
|
|
$
580.0
|
|
Accrued employee
compensation and benefits
|
109.8
|
|
135.2
|
|
Asset-based credit
facilities
|
78.1
|
|
219.3
|
|
Operating lease
liabilities, short-term
|
82.8
|
|
76.4
|
|
Construction
advances
|
119.9
|
|
35.4
|
|
Deferred
revenue
|
96.9
|
|
94.9
|
|
Other current
liabilities
|
35.6
|
|
35.0
|
|
Total current
liabilities
|
909.2
|
|
1,176.2
|
|
Long-term debt,
net
|
1,521.5
|
|
1,176.3
|
|
Long-term operating
leases
|
1,443.2
|
|
1,437.5
|
|
Deemed landlord
financing obligations, long-term
|
809.2
|
|
658.0
|
|
Deferred taxes,
net
|
68.3
|
|
117.5
|
|
Other long-term
liabilities
|
278.7
|
|
250.6
|
|
Total shareholders'
equity
|
3,951.9
|
|
3,774.3
|
|
Total liabilities and
shareholders' equity
|
$
8,982.0
|
|
$
8,590.4
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In millions, except
per share data)
|
|
(Unaudited)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
Products
|
$
597.1
|
|
$
579.3
|
|
$
2,078.2
|
|
$
2,018.2
|
|
Services
|
443.5
|
|
409.2
|
|
1,309.5
|
|
1,126.2
|
|
Total net
revenues
|
1,040.6
|
|
988.5
|
|
3,387.7
|
|
3,144.4
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of
products
|
337.1
|
|
330.7
|
|
1,167.0
|
|
1,142.5
|
|
Cost of services,
excluding depreciation and amortization
|
45.6
|
|
48.2
|
|
141.4
|
|
136.3
|
|
Other venue
expense
|
312.1
|
|
287.6
|
|
934.7
|
|
780.2
|
|
Selling, general and
administrative expense
|
242.5
|
|
224.7
|
|
790.6
|
|
720.4
|
|
Research and
development expense
|
22.6
|
|
19.2
|
|
67.4
|
|
55.4
|
|
Venue pre-opening
costs
|
6.9
|
|
9.9
|
|
16.3
|
|
18.1
|
|
Total costs and
expenses
|
966.8
|
|
920.3
|
|
3,117.4
|
|
2,852.9
|
|
Income from
operations
|
73.8
|
|
68.2
|
|
270.3
|
|
291.5
|
|
Interest expense,
net
|
(52.3)
|
|
(36.4)
|
|
(153.6)
|
|
(100.3)
|
|
Other income,
net
|
5.2
|
|
7.0
|
|
2.4
|
|
26.9
|
|
Income before
taxes
|
26.7
|
|
38.8
|
|
119.1
|
|
218.1
|
|
Income tax (benefit)
provision
|
(3.0)
|
|
0.3
|
|
(53.0)
|
|
(12.5)
|
|
Net Income
|
$
29.7
|
|
$
38.5
|
|
$
172.1
|
|
$
230.6
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
$0.16
|
|
$0.21
|
|
$0.93
|
|
$1.25
|
|
Diluted
|
$0.16
|
|
$0.20
|
|
$0.88
|
|
$1.17
|
|
Weighted-average common
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
185.2
|
|
184.8
|
|
185.2
|
|
184.9
|
|
Diluted
|
201.2
|
|
201.8
|
|
201.3
|
|
201.0
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
Nine Months
Ended
September
30,
|
|
2023
|
|
2022
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
$
172.1
|
|
$
230.6
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and amortization
|
175.7
|
|
139.8
|
|
Non-cash
interest on financing and deemed landlord financed
leases
|
17.1
|
|
4.3
|
|
Amortization of debt discount and issuance costs
|
4.9
|
|
7.4
|
|
Deferred
taxes, net
|
(54.4)
|
|
(12.5)
|
|
Non-cash share-based
compensation
|
38.4
|
|
37.4
|
|
Unrealized net gains
on hedging instruments and foreign currency
|
7.2
|
|
2.1
|
|
Loss on
debt modification
|
10.5
|
|
—
|
|
Other
|
1.5
|
|
4.8
|
|
Changes in assets and
liabilities, net
|
(145.3)
|
|
(379.3)
|
|
Net cash provided by
operating activities
|
227.7
|
|
34.6
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(388.7)
|
|
(353.4)
|
|
Asset acquisitions,
net of cash acquired
|
(31.2)
|
|
—
|
|
Proceeds from
government grants
|
3.0
|
|
—
|
|
Investment in
golf-related ventures
|
(2.5)
|
|
—
|
|
Acquisition of
intangible assets
|
(0.8)
|
|
(0.6)
|
|
Proceeds from sale of
investment in golf-related ventures
|
—
|
|
0.4
|
|
Proceeds from sale of
property and equipment
|
0.3
|
|
—
|
|
Net cash used in
investing activities
|
(419.9)
|
|
(353.6)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Repayments of
long-term debt
|
(788.2)
|
|
(87.0)
|
|
Proceeds from
borrowings on long-term debt
|
1,224.8
|
|
60.0
|
|
(Repayments of)
proceeds from credit facilities, net
|
(245.4)
|
|
100.0
|
|
Debt issuance
costs
|
(1.8)
|
|
—
|
|
Payment on contingent
earn-out obligation
|
—
|
|
(5.6)
|
|
Repayments of
financing leases
|
(2.2)
|
|
(0.3)
|
|
Proceeds from lease
financing
|
184.3
|
|
133.1
|
|
Exercise of stock
options
|
3.9
|
|
0.6
|
|
Acquisition of
treasury stock
|
(44.0)
|
|
(35.5)
|
|
Net cash provided by
financing activities
|
331.4
|
|
165.3
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(7.3)
|
|
0.6
|
|
Net increase (decrease)
in cash, cash equivalents and restricted cash
|
131.9
|
|
(153.1)
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
203.4
|
|
357.7
|
|
Cash, cash equivalents
and restricted cash at end of period
|
$
335.3
|
|
$
204.6
|
|
Less: restricted
cash(1)
|
(5.0)
|
|
(4.3)
|
|
Cash and cash
equivalents at end of period
|
$
330.3
|
|
$
200.3
|
|
|
|
|
|
|
(1)
|
Includes $0.7 million
and $0.5 million of short-term restricted cash and $4.3 million and
$3.8 million of long-term restricted cash included in other assets
for the periods ended September 30, 2023 and 2022,
respectively.
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
CONSOLIDATED NET
REVENUES AND OPERATING SEGMENT INFORMATION
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
Net Revenues by
Category
|
|
Three Months
Ended
September
30,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Venues
|
$
430.5
|
|
$
399.5
|
|
$
31.0
|
|
7.8 %
|
|
7.5 %
|
|
Topgolf other business
lines
|
17.2
|
|
14.3
|
|
2.9
|
|
20.3 %
|
|
19.6 %
|
|
Golf Clubs
|
222.2
|
|
221.4
|
|
0.8
|
|
0.4 %
|
|
0.1 %
|
|
Golf Balls
|
71.2
|
|
75.3
|
|
(4.1)
|
|
(5.4 %)
|
|
(6.2 %)
|
|
Apparel
|
211.7
|
|
181.4
|
|
30.3
|
|
16.7 %
|
|
15.5 %
|
|
Gear, Accessories
& Other
|
87.8
|
|
96.6
|
|
(8.8)
|
|
(9.1 %)
|
|
(11.2 %)
|
|
Total net
revenues
|
$
1,040.6
|
|
$
988.5
|
|
$
52.1
|
|
5.3 %
|
|
4.6 %
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2022 exchange rates to 2023 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues by
Region
|
|
Three Months
Ended
September
30,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
737.3
|
|
$
684.8
|
|
$
52.5
|
|
7.7 %
|
|
7.7 %
|
|
Europe
|
149.5
|
|
141.9
|
|
7.6
|
|
5.4 %
|
|
(2.3 %)
|
|
Asia
|
130.7
|
|
138.7
|
|
(8.0)
|
|
(5.8 %)
|
|
(3.2 %)
|
|
Rest of
world
|
23.1
|
|
23.1
|
|
—
|
|
— %
|
|
3.0 %
|
|
Total net
revenues
|
$
1,040.6
|
|
$
988.5
|
|
$
52.1
|
|
5.3 %
|
|
4.6 %
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2022 exchange rates to 2023 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
Three Months
Ended
September
30,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
447.7
|
|
$
413.8
|
|
$
33.9
|
|
8.2 %
|
|
7.9 %
|
|
Golf
Equipment
|
293.4
|
|
296.7
|
|
(3.3)
|
|
(1.1 %)
|
|
(1.5 %)
|
|
Active
Lifestyle
|
299.5
|
|
278.0
|
|
21.5
|
|
7.7 %
|
|
6.2 %
|
|
Total net
revenues
|
$
1,040.6
|
|
$
988.5
|
|
$
52.1
|
|
5.3 %
|
|
4.6 %
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
38.9
|
|
$
23.6
|
|
$
15.3
|
|
64.8 %
|
|
|
|
Golf
Equipment
|
35.2
|
|
49.6
|
|
(14.4)
|
|
(29.0 %)
|
|
|
|
Active
Lifestyle
|
40.0
|
|
28.1
|
|
11.9
|
|
42.3 %
|
|
|
|
Total segment operating
income
|
114.1
|
|
101.3
|
|
12.8
|
|
12.6 %
|
|
|
|
Corporate G&A and
other(2)
|
(40.3)
|
|
(33.1)
|
|
(7.2)
|
|
21.8 %
|
|
|
|
Total operating
Income
|
73.8
|
|
68.2
|
|
5.6
|
|
8.2 %
|
|
|
|
Interest expense,
net
|
(52.3)
|
|
(36.4)
|
|
(15.9)
|
|
43.7 %
|
|
|
|
Other income,
net
|
5.2
|
|
7.0
|
|
(1.8)
|
|
(25.7 %)
|
|
|
|
Total Income before
income taxes
|
$
26.7
|
|
$
38.8
|
|
$
(12.1)
|
|
(31.2 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Calculated by applying
2022 exchange rates to 2023 reported sales in regions outside the
U.S.
|
|
(2)
|
Amount includes
corporate general and administrative expenses not utilized by
management in determining segment profitability, in addition to
certain non-cash and non-recurring items described in the
Supplemental Financial Information and Non-GAAP Reconciliation
table below.
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
CONSOLIDATED NET
REVENUES AND OPERATING SEGMENT INFORMATION
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
Net Revenues by
Category
|
|
Nine Months
Ended
September
30,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Venues
|
$
1,270.4
|
|
$
1,089.4
|
|
$
181.0
|
|
16.6 %
|
|
16.6 %
|
|
Topgolf other business
lines
|
51.6
|
|
50.1
|
|
1.5
|
|
3.0 %
|
|
4.6 %
|
|
Golf Clubs
|
913.3
|
|
959.6
|
|
(46.3)
|
|
(4.8 %)
|
|
(2.9 %)
|
|
Golf Balls
|
274.8
|
|
257.0
|
|
17.8
|
|
6.9 %
|
|
8.0 %
|
|
Apparel
|
531.3
|
|
456.7
|
|
74.6
|
|
16.3 %
|
|
17.6 %
|
|
Gear, Accessories
& Other
|
346.3
|
|
331.6
|
|
14.7
|
|
4.4 %
|
|
5.2 %
|
|
Total net
revenues
|
$
3,387.7
|
|
$
3,144.4
|
|
$
243.3
|
|
7.7 %
|
|
8.7 %
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2022 exchange rates to 2023 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues by
Region
|
|
Nine Months
Ended
September
30,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
2,435.1
|
|
$
2,194.7
|
|
$
240.4
|
|
11.0 %
|
|
11.0 %
|
|
Europe
|
423.3
|
|
417.7
|
|
5.6
|
|
1.3 %
|
|
0.9 %
|
|
Asia
|
419.1
|
|
432.6
|
|
(13.5)
|
|
(3.1 %)
|
|
3.1 %
|
|
Rest of
world
|
110.2
|
|
99.4
|
|
10.8
|
|
10.9 %
|
|
16.5 %
|
|
Total net
revenues
|
$
3,387.7
|
|
$
3,144.4
|
|
$
243.3
|
|
7.7 %
|
|
8.7 %
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2022 exchange rates to 2023 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
Nine Months
Ended
September
30,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
1,322.0
|
|
$
1,139.5
|
|
$
182.5
|
|
16.0 %
|
|
16.1 %
|
|
Golf
Equipment
|
1,188.1
|
|
1,216.6
|
|
(28.5)
|
|
(2.3 %)
|
|
(0.6 %)
|
|
Active
Lifestyle
|
877.6
|
|
788.3
|
|
89.3
|
|
11.3 %
|
|
12.4 %
|
|
Total net
revenues
|
$
3,387.7
|
|
$
3,144.4
|
|
$
243.3
|
|
7.7 %
|
|
8.7 %
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
85.7
|
|
$
74.3
|
|
$
11.4
|
|
15.3 %
|
|
|
|
Golf
Equipment
|
213.2
|
|
250.7
|
|
(37.5)
|
|
(15.0 %)
|
|
|
|
Active
Lifestyle
|
96.8
|
|
77.3
|
|
19.5
|
|
25.2 %
|
|
|
|
Total segment operating
income
|
395.7
|
|
402.3
|
|
(6.6)
|
|
(1.6 %)
|
|
|
|
Corporate costs and
expenses(2)
|
(125.4)
|
|
(110.8)
|
|
(14.6)
|
|
13.2 %
|
|
|
|
Total operating
income
|
270.3
|
|
291.5
|
|
(21.2)
|
|
(7.3 %)
|
|
|
|
Interest expense,
net
|
(153.6)
|
|
(100.3)
|
|
(53.3)
|
|
53.1 %
|
|
|
|
Other income,
net
|
2.4
|
|
26.9
|
|
(24.5)
|
|
(91.1 %)
|
|
|
|
Total income before
income taxes
|
$
119.1
|
|
$
218.1
|
|
$
(99.0)
|
|
(45.4 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Calculated by applying
2022 exchange rates to 2023 reported sales in regions outside the
U.S.
|
|
(2)
|
Amount includes
corporate general and administrative expenses not utilized by
management in determining segment profitability, in addition to
certain non-cash and non-recurring items described in the
Supplemental Financial Information and Non-GAAP Reconciliation
table below.
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
SUPPLEMENTAL
FINANCIAL INFORMATION AND NON-GAAP RECONCILIATION
|
|
(In millions, except
per share data)
|
|
(Unaudited)
|
|
|
Three Months Ended
September 30,
|
|
2023
|
|
2022
|
|
GAAP
|
|
Non-Cash
Amortization
and
Depreciation(1)
|
|
Non-
Recurring
Items(2)
|
|
Tax
Valuation
Allowance(3)
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-Cash
Amortization
and
Depreciation(1)
|
|
Non-
Recurring
Items(4)
|
|
Tax
Valuation
Allowance(3)
|
|
Non-
GAAP
|
|
Net revenues
|
$
1,040.6
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
1,040.6
|
|
$ 988.5
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$ 988.5
|
|
Total costs and
expenses
|
966.8
|
|
5.8
|
|
5.6
|
|
—
|
|
955.4
|
|
920.3
|
|
6.8
|
|
6.1
|
|
—
|
|
907.4
|
|
Income (loss) from
operations
|
73.8
|
|
(5.8)
|
|
(5.6)
|
|
—
|
|
85.2
|
|
68.2
|
|
(6.8)
|
|
(6.1)
|
|
—
|
|
81.1
|
|
Other expense,
net
|
(47.1)
|
|
—
|
|
—
|
|
—
|
|
(47.1)
|
|
(29.4)
|
|
(1.0)
|
|
(0.3)
|
|
—
|
|
(28.1)
|
|
Income (loss) before
income taxes
|
26.7
|
|
(5.8)
|
|
(5.6)
|
|
—
|
|
38.1
|
|
38.8
|
|
(7.8)
|
|
(6.4)
|
|
—
|
|
53.0
|
|
Income tax (benefit)
provision
|
(3.0)
|
|
(1.3)
|
|
(1.3)
|
|
(0.3)
|
|
(0.1)
|
|
0.3
|
|
(1.9)
|
|
(1.6)
|
|
(4.6)
|
|
8.4
|
|
Net income
(loss)
|
$ 29.7
|
|
$
(4.5)
|
|
$
(4.3)
|
|
$
0.3
|
|
$ 38.2
|
|
$ 38.5
|
|
$
(5.9)
|
|
$
(4.8)
|
|
$
4.6
|
|
$
44.6
|
|
Earnings (loss) per
share - diluted (5)
|
$ 0.16
|
|
$
(0.02)
|
|
$
(0.02)
|
|
$
—
|
|
$ 0.20
|
|
$ 0.20
|
|
$
(0.03)
|
|
$
(0.02)
|
|
$
0.02
|
|
$
0.23
|
|
Weighted-average shares
outstanding
- diluted
|
201.2
|
|
201.2
|
|
201.2
|
|
201.2
|
|
201.2
|
|
201.8
|
|
201.8
|
|
201.8
|
|
201.8
|
|
201.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes amortization
and depreciation of acquired intangible assets and purchase
accounting adjustments related to acquisitions.
|
|
(2)
|
Primarily includes $2.7
million in restructuring and reorganization charges in our Active
Lifestyle segment and $1.5 million in IT costs related to a
cybersecurity incident.
|
|
(3)
|
Release of tax
valuation allowances recorded in connection with the merger
with Topgolf.
|
|
(4)
|
Primarily includes $4.8
million in charges related to the suspension of our
Jack Wolfskin retail operations in Russia and $1.4 million in
IT integration and implementation costs primarily related to the
Topgolf merger.
|
|
(5)
|
In accordance
with ASU 2020-06, periodic interest expense of $1.6 million
related to the 2020 Convertible Notes is excluded from the
calculation of net income for the purpose of calculating diluted
earnings per share.
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
SUPPLEMENTAL
FINANCIAL INFORMATION AND NON-GAAP RECONCILIATION
|
|
(In millions, except
per share data)
|
|
(Unaudited)
|
|
|
Nine months ended
September 30,
|
|
2023
|
|
2022
|
|
GAAP
|
|
Non-Cash
Amortization
and
Depreciation(1)
|
|
Non-
Recurring
Items(2)
|
|
Tax
Valuation
Allowance(3)
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-Cash
Amortization
and
Depreciation(1)
|
|
Non-
Recurring
Items(4)
|
|
Tax
Valuation
Allowance(3)
|
|
Non-
GAAP
|
|
Net revenues
|
$
3,387.7
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
3,387.7
|
|
$
3,144.4
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
3,144.4
|
|
Total costs and
expenses
|
3,117.4
|
|
20.0
|
|
16.4
|
|
—
|
|
3,081.0
|
|
2,852.9
|
|
18.3
|
|
12.4
|
|
—
|
|
2,822.2
|
|
Income (loss) from
operations
|
270.3
|
|
(20.0)
|
|
(16.4)
|
|
—
|
|
306.7
|
|
291.5
|
|
(18.3)
|
|
(12.4)
|
|
—
|
|
322.2
|
|
Other expense,
net
|
(151.2)
|
|
(0.6)
|
|
(10.8)
|
|
—
|
|
(139.8)
|
|
(73.4)
|
|
(2.8)
|
|
(0.9)
|
|
—
|
|
(69.7)
|
|
Income (loss) before
income taxes
|
119.1
|
|
(20.6)
|
|
(27.2)
|
|
—
|
|
166.9
|
|
218.1
|
|
(21.1)
|
|
(13.3)
|
|
—
|
|
252.5
|
|
Income tax (benefit)
provision
|
(53.0)
|
|
(4.9)
|
|
(6.4)
|
|
(59.4)
|
|
17.7
|
|
(12.5)
|
|
(5.1)
|
|
(2.9)
|
|
(48.0)
|
|
43.5
|
|
Net income
(loss)
|
$ 172.1
|
|
$
(15.7)
|
|
$
(20.8)
|
|
$
59.4
|
|
$ 149.2
|
|
$ 230.6
|
|
$
(16.0)
|
|
$
(10.4)
|
|
$
48.0
|
|
$ 209.0
|
|
Earnings (loss) per
share - diluted(5)
|
$ 0.88
|
|
$
(0.08)
|
|
$
(0.10)
|
|
$
0.29
|
|
$ 0.77
|
|
$ 1.17
|
|
$
(0.08)
|
|
$
(0.05)
|
|
$
0.24
|
|
$ 1.06
|
|
Weighted-average
shares
outstanding - diluted
|
201.3
|
|
201.3
|
|
201.3
|
|
201.3
|
|
201.3
|
|
201.0
|
|
201.0
|
|
201.0
|
|
201.0
|
|
201.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes amortization
and depreciation of acquired intangible assets and purchase
accounting adjustments related to acquisitions.
|
|
(2)
|
Primarily includes
$13.6 million in total charges related to our 2023 debt
modification, $5.8 million in restructuring and reorganization
charges in our Active Lifestyle segment, $3.7 million in IT
integration and implementation costs primarily related to the
Topgolf merger, and $1.5 million in costs related to a
cybersecurity incident.
|
|
(3)
|
Related to the release
of tax valuation allowances recorded in connection with the merger
with Topgolf.
|
|
(4)
|
Primarily includes $5.9
million in non-cash asset write-downs related to the suspension of
our Jack Wolfskin retail operations in Russia, $3.6 million in IT
integration and implementation costs primarily related to the
Topgolf merger, and $3.5 million in legal and credit agency fees
related to a postponed debt refinancing.
|
|
(5)
|
In accordance with ASU
2020-06, periodic interest expense of $4.8 million related to the
2020 Convertible Notes is excluded from the calculation of net
income for the purpose of calculating diluted earnings per
share.
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
NON-GAAP
RECONCILIATION AND SUPPLEMENTAL FINANCIAL
INFORMATION
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
2023 Trailing Twelve Month Adjusted
EBITDA
|
|
2022 Trailing Twelve Month Adjusted
EBITDA
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
|
|
2022
|
|
2023
|
|
2023
|
|
2023
|
|
Total
|
|
2021
|
|
2022
|
|
2022
|
|
2022
|
|
Total
|
|
Net (loss)
income
|
$
(72.7)
|
|
$
25.0
|
|
$
117.4
|
|
$
29.7
|
|
$
99.4
|
|
$
(26.2)
|
|
$
86.7
|
|
$
105.4
|
|
$
38.5
|
|
$ 204.4
|
|
Interest expense,
net
|
42.5
|
|
49.6
|
|
51.7
|
|
52.3
|
|
196.1
|
|
40.5
|
|
31.4
|
|
32.5
|
|
36.4
|
|
140.8
|
|
Income tax (benefit)
provision
|
(3.5)
|
|
(4.2)
|
|
(45.8)
|
|
(3.0)
|
|
(56.5)
|
|
(69.5)
|
|
(15.7)
|
|
2.9
|
|
0.3
|
|
(82.0)
|
|
Non-cash depreciation
and amortization
expense
|
53.0
|
|
56.1
|
|
58.6
|
|
61.0
|
|
228.7
|
|
47.9
|
|
42.5
|
|
48.9
|
|
48.4
|
|
187.7
|
|
Non-cash stock
compensation and stock
warrant expense, net
|
9.7
|
|
12.5
|
|
12.3
|
|
13.2
|
|
47.7
|
|
12.0
|
|
14.5
|
|
11.6
|
|
10.3
|
|
48.4
|
|
Non-cash lease
amortization expense
|
4.5
|
|
4.6
|
|
4.4
|
|
4.5
|
|
18.0
|
|
7.7
|
|
3.5
|
|
6.6
|
|
4.4
|
|
22.2
|
|
Acquisitions &
non-recurring items, before
taxes(1)
|
3.1
|
|
13.7
|
|
7.6
|
|
5.6
|
|
30.0
|
|
1.9
|
|
6.9
|
|
(0.6)
|
|
6.1
|
|
14.3
|
|
Adjusted
EBITDA
|
$
36.6
|
|
$
157.3
|
|
$
206.2
|
|
$
163.3
|
|
$ 563.4
|
|
$
14.3
|
|
$
169.8
|
|
$
207.3
|
|
$
144.4
|
|
$ 535.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In 2023, amounts
include total charges in connection with the 2023 debt
modification, IT integration and implementation costs stemming
primarily from the merger with Topgolf, and charges related to a
restructuring and reorganization in our Active Lifestyle segment.
In 2022, amounts include implementation costs associated with new
ERP systems primarily related to the integration of Topgolf, legal
costs and credit agency fees related to a postponed debt
refinancing, and reorganization costs. In 2021, amounts include
transaction, transition, and other non-recurring costs associated
with the merger with Topgolf, and expenses related to the
implementation of new IT systems for Jack Wolfskin.
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
TOPGOLF NON-GAAP
RECONCILIATION AND SUPPLEMENTAL FINANCIAL
INFORMATION
|
|
(Unaudited)
|
|
(In
millions)
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Topgolf Segment
operating income(1):
|
$
38.9
|
|
$
23.6
|
|
$
85.7
|
|
$
74.3
|
|
Depreciation and
amortization expense
|
43.2
|
|
30.5
|
|
119.5
|
|
90.6
|
|
Non-cash stock
compensation expense
|
4.1
|
|
5.5
|
|
12.4
|
|
13.7
|
|
Non-cash lease
amortization expense
|
4.3
|
|
5.0
|
|
13.1
|
|
14.8
|
|
Other expense
(income), net
|
0.4
|
|
(0.4)
|
|
0.4
|
|
(1.3)
|
|
Topgolf Adjusted
Segment EBITDA
|
$
90.9
|
|
$
64.2
|
|
$
231.1
|
|
$
192.1
|
|
|
|
(1)
|
We do not calculate
GAAP net income at the operating segment level, but have provided
Topgolf's segment income from operations as a relevant measurement
of profitability. Segment income from operations does not include
interest expense and taxes as well as other non-cash and
non-recurring items. Segment operating income is reconciled to the
Company's consolidated pre-tax income in the Segment Results
section of this release.
|
|
Twelve Months
Ended
December 31,
2022
|
|
|
Topgolf Segment
operating income(1):
|
$
76.8
|
|
|
Depreciation and
amortization expense
|
125.2
|
|
|
Non-cash stock
compensation expense
|
15.2
|
|
|
Non-cash lease
amortization expense
|
19.6
|
|
|
Other income,
net
|
(1.4)
|
|
|
Topgolf Adjusted
Segment EBITDA
|
$
235.4
|
|
|
|
|
|
|
|
|
(1)
|
We do not calculate
GAAP net income at the operating segment level, but have provided
Topgolf's segment income from operations as a relevant measurement
of profitability. Segment income from operations does not include
interest expense and taxes as well as other non-cash and
non-recurring items. Segment operating income is reconciled to the
Company's consolidated pre-tax income in the Segment Results
section of this release.
|
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SOURCE Topgolf Callaway Brands Corp.