HIGHLIGHTS
- Consolidated full year revenue growth of 7%.
- Consolidated Cash from Operations of $365 million and $221
million of Embedded Cash Flow.1
- Topgolf business delivers full year 1% Same Venue Sales growth
and positive Free Cash Flow.
- Golf Equipment maintained strong U.S. market share in 2023
including #1 in Total Clubs, Woods, Drivers, Fairway Woods,
Hybrids, and Irons. Paradym was the #1 model in Drivers and Fairway
Woods in 2023.
- Active Lifestyle segment revenue grew over 9%.
CARLSBAD, Calif., Feb. 13,
2024 /PRNewswire/ -- Topgolf Callaway Brands
Corp. (the "Company" or "Topgolf Callaway Brands") (NYSE: MODG)
announced its financial results for the fourth quarter ended
December 31, 2023.
"I am very pleased with our fourth quarter results, which
included revenue growth in each of our operating segments,
culminating in consolidated revenue growth of over 5% and almost
doubling our Adjusted EBITDA1," commented Chip Brewer, President and Chief Executive
Officer of Topgolf Callaway Brands. "In addition, we achieved an
important financial milestone this year becoming free cash flow
positive both on a consolidated basis and at Topgolf - well ahead
of our plan at the time of the merger."
"We have good momentum as we enter 2024," continued Mr. Brewer.
"In our golf equipment segment, we finished the year with the #1
U.S. market share for total clubs, woods, drivers, fairway woods,
hybrids and irons and our new 2024 product line is our best yet,
receiving accolades from the trade, the tour and consumers alike.
We also finished 2023 with high single digit revenue growth in our
active lifestyle segment, including double-digit revenue and
Adjusted EBITDA growth at Travis Mathew. At Topgolf, Same
Venue Sales outperformed expectations in Q4, as a result of a
stronger-than-anticipated holiday season and finished the full year
at + 1%. The Topgolf business also opened 11 new venues in
2023 and acquired the BigShots franchise in the fourth quarter,
while meaningfully expanding venue-level margins. Looking ahead,
despite a potentially softer consumer environment this year, given
the strength of our businesses and the record participation and
influx of new entrants into the modern golf ecosystem, for 2024 we
expect further growth in revenue and Adjusted EBITDA as well as
continued solid cash flow generation."
|
|
|
|
|
|
|
1 Non-GAAP
measure. Please see "Additional Information and
Disclosures—Non-GAAP Information" and reconciliations
below.
|
CONSOLIDATED RESULTS
The Company announced the following GAAP and non-GAAP financial
results for the three and twelve months ended December 31, 2023 and 2022:
GAAP
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except
percentages and per share data)
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
Net revenues
|
$ 897.1
|
|
$ 851.3
|
|
$
45.8
|
|
5.4 %
|
|
$
4,284.8
|
|
$
3,995.7
|
|
$ 289.1
|
|
7.2 %
|
Income (loss) from
operations
|
(32.6)
|
|
(34.7)
|
|
2.1
|
|
(6.1) %
|
|
237.7
|
|
256.8
|
|
(19.1)
|
|
(7.4) %
|
Other expense,
net
|
(51.7)
|
|
(41.5)
|
|
(10.2)
|
|
24.6 %
|
|
(202.9)
|
|
(114.9)
|
|
(88.0)
|
|
76.6 %
|
Income (loss) before
taxes
|
(84.3)
|
|
(76.2)
|
|
(8.1)
|
|
10.6 %
|
|
34.8
|
|
141.9
|
|
(107.1)
|
|
(75.5) %
|
Income tax
benefit
|
(7.2)
|
|
(3.5)
|
|
(3.7)
|
|
105.7 %
|
|
(60.2)
|
|
(16.0)
|
|
(44.2)
|
|
276.3 %
|
Net income
(loss)
|
$ (77.1)
|
|
$ (72.7)
|
|
$
(4.4)
|
|
6.1 %
|
|
$ 95.0
|
|
$ 157.9
|
|
$ (62.9)
|
|
(39.8) %
|
Earnings (loss) per
share - diluted
|
$ (0.42)
|
|
$ (0.39)
|
|
$
(0.03)
|
|
7.7 %
|
|
$ 0.50
|
|
$ 0.82
|
|
$ (0.32)
|
|
(39.0) %
|
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
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
Constant
Currency
vs.
2022
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
Constant
Currency
vs.
2022
|
Net revenues
|
$
897.1
|
|
$
851.3
|
|
$
45.8
|
|
5.4 %
|
|
4.8 %
|
|
$
4,284.8
|
|
$
3,995.7
|
|
$
289.1
|
|
7.2 %
|
|
7.9 %
|
Income (loss) from
operations
|
(6.6)
|
|
(24.9)
|
|
18.3
|
|
(73.5) %
|
|
(64.4) %
|
|
300.1
|
|
297.3
|
|
2.8
|
|
0.9 %
|
|
6.5 %
|
Other expense,
net
|
(51.7)
|
|
(40.3)
|
|
(11.4)
|
|
28.3 %
|
|
|
|
(191.5)
|
|
(110.0)
|
|
(81.5)
|
|
74.1 %
|
|
|
Income (loss) before
taxes
|
(58.3)
|
|
(65.2)
|
|
6.9
|
|
(10.6) %
|
|
|
|
108.6
|
|
187.3
|
|
(78.7)
|
|
(42.0) %
|
|
|
Income tax provision
(benefit)
|
(2.1)
|
|
(14.4)
|
|
12.3
|
|
(85.4) %
|
|
|
|
15.6
|
|
29.1
|
|
(13.5)
|
|
(46.4) %
|
|
|
Net income
(loss)
|
$
(56.2)
|
|
$
(50.8)
|
|
$ (5.4)
|
|
10.6 %
|
|
|
|
$
93.0
|
|
$
158.2
|
|
$
(65.2)
|
|
(41.2) %
|
|
|
Earnings (loss) per
share - diluted
|
$
(0.30)
|
|
$
(0.27)
|
|
$
(0.03)
|
|
11.1 %
|
|
|
|
$
0.49
|
|
$
0.82
|
|
$
(0.33)
|
|
(40.2) %
|
|
|
Adjusted
EBITDA
|
$
69.8
|
|
$
36.6
|
|
$
33.2
|
|
90.7 %
|
|
84.5 %
|
|
$
596.6
|
|
$
558.1
|
|
$
38.5
|
|
6.9 %
|
|
9.8 %
|
FOURTH QUARTER 2023 CONSOLIDATED RESULTS COMMENTARY
(All comparisons to prior periods are calculated on a
year-over-year basis, unless otherwise noted)
The Company's net revenues grew 5.4%, as a result of revenue
growth across each of its operating segments. More specifically,
revenue grew 7% at Topgolf, 5% in the Golf Equipment segment, and
3% in the Active Lifestyle segment.
The Company typically reports an operating loss in the fourth
quarter due to the seasonality of its businesses, but that loss was
better in the fourth quarter of this year compared to last year. On
a GAAP basis, loss from operations improved 6.1%. On a non-GAAP
basis, loss from operations improved 73.5%. The improvements were
generally driven by the increased revenue as well as increased
segment operating income at Topgolf and the Active Lifestyle
businesses.
Net loss increased 6.1% on a GAAP basis and 10.6% a non-GAAP
basis. This increase was primarily attributable to a $15.3 million increase in interest expense
related to additional term loan debt and increased venue financing
interest, partially offset by the improvement in operating
loss.
Adjusted EBITDA grew 90.7%, driven primarily by revenue growth
in each of our three segments and significant improvement in
operational efficiencies at Topgolf.
SEGMENT RESULTS
SEGMENT NET REVENUES
The table below provides net revenues by segment for the three
and twelve months ended December 31,
2023 and 2022:
(in millions, except
percentages)
|
Three Months Ended
December 31,
|
|
Constant
Currency
vs.
2022(1)
|
|
Twelve Months Ended
December 31,
|
|
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
%
Change
|
|
%
Change
|
|
2023
|
|
2022
|
|
%
Change
|
|
%
Change
|
Topgolf
|
$
439.0
|
|
$
409.5
|
|
7.2 %
|
|
7.0 %
|
|
$
1,761.0
|
|
$
1,549.0
|
|
13.7 %
|
|
13.7 %
|
Golf
Equipment
|
199.4
|
|
190.0
|
|
4.9 %
|
|
4.6 %
|
|
1,387.5
|
|
1,406.6
|
|
(1.4) %
|
|
0.1 %
|
Active
Lifestyle
|
258.7
|
|
251.8
|
|
2.7 %
|
|
1.3 %
|
|
1,136.3
|
|
1,040.1
|
|
9.2 %
|
|
9.7 %
|
Net Revenues
|
$
897.1
|
|
$
851.3
|
|
5.4 %
|
|
4.8 %
|
|
$
4,284.8
|
|
$
3,995.7
|
|
7.2 %
|
|
7.9 %
|
|
(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 twelve months ended December 31, 2023 and 2022:
(in millions, except
percentages)
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2023
|
|
2022
|
|
Change
|
|
2023
|
|
2022
|
|
Change
|
Topgolf
|
$ 23.1
|
|
$
2.5
|
|
n/m
|
|
$ 108.8
|
|
$ 76.8
|
|
41.7 %
|
% of segment
revenue
|
5.3 %
|
|
0.6 %
|
|
470
bps
|
|
6.2 %
|
|
5.0 %
|
|
120
bps
|
Golf
Equipment
|
(19.9)
|
|
0.7
|
|
n/m
|
|
193.3
|
|
251.4
|
|
(23.1) %
|
% of segment
revenue
|
(10.0) %
|
|
0.4 %
|
|
n/m
|
|
13.9 %
|
|
17.9 %
|
|
(400) bps
|
Active
Lifestyle
|
20.2
|
|
0.1
|
|
n/m
|
|
117.0
|
|
77.4
|
|
51.2 %
|
% of segment
revenue
|
7.8 %
|
|
— %
|
|
780
bps
|
|
10.3 %
|
|
7.4 %
|
|
290
bps
|
Total Segment Operating
Income
|
$ 23.4
|
|
$
3.3
|
|
n/m
|
|
$ 419.1
|
|
$ 405.6
|
|
3.3 %
|
% of total segment
revenue
|
2.6 %
|
|
0.4 %
|
|
220
bps
|
|
9.8 %
|
|
10.2 %
|
|
(40)
bps
|
Constant
Currency
Total Segment Operating
Income
|
|
|
|
|
n/m
|
|
|
|
|
|
7.4 %
|
FOURTH QUARTER 2023 SEGMENT COMMENTARY
(All comparisons to prior periods are calculated on a
year-over-year basis, unless otherwise noted)
Topgolf
- Segment revenue increased $29.5
million or 7.2%, to $439.0
million, driven primarily by new venues.
- Same Venue Sales of -3% was better than our guidance, driven by
better-than-expected performance in our 1- and 2-Bay consumer
business.
- Segment operating income increased $20.6
million to $23.1 million and
Segment Adjusted EBITDA increased $30.0
million, or 69.4%, to $73.2
million primarily due to increased revenues and improved
operational efficiencies in the venues.
Golf Equipment
- Segment revenue increased $9.4
million or 4.9% to $199.4
million, primarily due to Q4 2023 golf club launches
partially offset by a decrease in golf ball sales as the Company
prepared for its new Chrome Tour ball to launch in early 2024.
- Segment operating income decreased $20.6
million due to lower production volumes in the second half
of 2023, as expected, resulting in unfavorable cost absorption and
a return to more normalized promotional levels as compared to the
prior year.
Active Lifestyle
- Segment revenue increased $6.9
million or 2.7% to $258.7
million, driven by growth at TravisMathew.
- Segment operating income increased $20.1
million driven by increases in revenue and gross margin as a
result of a higher mix of direct-to-consumer business and lower
input costs.
FULL YEAR 2023 SEGMENT COMMENTARY
(All comparisons to prior periods are calculated on a
year-over-year basis, unless otherwise noted)
Topgolf
- Segment revenue increased $212.0
million, or 13.7%, compared to 2022, driven by continued
successful new venue openings and Same Venue Sales growth of
1%.
- Segment operating income increased $32.0
million, or 41.7%, to $108.8
million, and segment Adjusted EBITDA increased $68.9 million (or 29.3%) to $304.3 million, as compared to 2022, due to new
venue openings, growth in existing venues and further operational
efficiencies in the venue business which drove further increases in
venue-level margin.
- Opened 11 new owned and operated Topgolf venues and acquired 1
additional owned venue through the BigShots acquisition.
Golf Equipment
- Segment revenue decreased $19.1
million, or 1.4%, (0.1% on a constant currency basis), as a
result of unfavorable changes in foreign currency rates and record
high revenue in 2022 resulting from a post-pandemic inventory
fill-in at retail.
- Segment operating income decreased $58.1
million, or 23.1%, primarily due to the lower revenues,
lower production volumes in the second half of 2023 resulting in
unfavorable cost absorption, a return to more normal levels of
promotional activity and unfavorable changes in foreign currency
rates.
Active Lifestyle
- Segment revenue increased $96.2
million, or 9.2%, driven primarily by double digit growth at
TravisMathew.
- Segment operating income increased $39.6
million, or 51.2%, driven by continued brand momentum and a
higher mix of direct-to-consumer sales and lower freight
costs.
The following is a reconciliation of total segment operating
income to income before income taxes for the three and twelve
months ended December 31, 2023 and
2022:
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(in
millions)
|
2023
|
|
2022
|
|
$
Change
|
|
2023
|
|
2022
|
|
$
Change
|
Total segment operating
income:
|
$
23.4
|
|
$
3.3
|
|
$
20.1
|
|
$
419.1
|
|
$
405.6
|
|
$
13.5
|
Reconciling
items(1)
|
(56.0)
|
|
(38.0)
|
|
(18.0)
|
|
(181.4)
|
|
(148.8)
|
|
(32.6)
|
Income (loss) from
operations
|
(32.6)
|
|
(34.7)
|
|
2.1
|
|
237.7
|
|
256.8
|
|
(19.1)
|
Interest expense,
net
|
(56.6)
|
|
(42.5)
|
|
(14.1)
|
|
(210.2)
|
|
(142.8)
|
|
(67.4)
|
Other income,
net
|
4.9
|
|
1.0
|
|
3.9
|
|
7.3
|
|
27.9
|
|
(20.6)
|
Income (loss) before
income taxes
|
$
(84.3)
|
|
$
(76.2)
|
|
$
(8.1)
|
|
$
34.8
|
|
$
141.9
|
|
$
(107.1)
|
|
(1) Includes
corporate overhead and certain non-recurring and non-cash items as
described in the schedules to this release.
|
FULL YEAR 2023 BALANCE SHEET AND CASH FLOW HIGHLIGHTS
- Inventory decreased $164.8
million year-over-year to $794.4
million. By segment, Golf Equipment and Active Lifestyle
inventory decreased by over $100.0
million and $60.0 million,
respectively. Topgolf inventory increased modestly as result of the
addition of 11 new owned and operated venues.
- Cash and cash equivalents increased $213.3 million to $393.5
million. Global cash and availability increased $327.3 million to $742.6
million largely due to the increased borrowings under the
Company's new Term loan B in March
2023.
- Total cash provided by operations was $364.7 million compared to cash used in
operations of $35.1 million in the
prior year due to significant improvements in working capital. Free
Cash Flow and Embedded Cash Flow were $160
million and $221 million,
respectively, both ahead of expectations.
BUSINESS OUTLOOK
The Company's 2024 outlook reflects a potentially softer
consumer environment in 2024 and approximately $20 million in pre-tax income headwinds related
to foreign currency. Despite these headwinds, the Company expects
growth in revenue, Adjusted EBITDA and Embedded Cash Flow given the
strength of its three operating segments and the momentum the
Company has entering 2024, including the strength of the Company's
new golf equipment product line. The 2024 projections set forth
below are based on the Company's best estimates at this time.
2024 FULL YEAR
OUTLOOK
|
(in millions, except
where noted otherwise and for percentages and per share
data)
|
|
|
|
|
|
2024
Current
Estimate
|
|
2023
As
Reported
|
Consolidated Net
Revenues(1)
|
$4,515 -
$4,555
|
|
$4,285
|
Topgolf
Revenue
|
Approx.
$1,960
|
|
$1,761
|
Topgolf Same Venue
Sales Growth
|
Approx. Flat
|
|
1 %
|
Consolidated Adjusted
EBITDA
|
$620 - 640
|
|
$597
|
Topgolf Adjusted
EBITDA
|
Approx. $350
|
|
$304
|
Non-GAAP Diluted
Earnings per Share
|
$0.26 -
$0.34
|
|
$0.49
|
Shares
Outstanding
|
Approx. 202
|
|
201
|
|
|
|
|
(1) 2024
includes an estimated $10 million unfavorable year-over-year
foreign currency impact on revenue and an estimated $6.5 million
unfavorable foreign currency impact on profit
translation. 2023 As Reported amounts include $13.4 million in
positive hedge gains.
|
2024 FIRST QUARTER
OUTLOOK
|
(in
millions)
|
|
|
|
|
Q1
2024
Estimate
|
|
Q1
2023
Reported
Results
|
Consolidated Net
Revenues(1)
|
$1,140 -
$1,160
|
|
$1,167
|
Consolidated Adjusted
EBITDA
|
$130 - $140
|
|
$157
|
|
|
|
|
(1) 2024
estimates include approximately $6 million of unfavorable foreign
currency impacts on revenue and approximately $3 million of
unfavorable foreign currency impacts on profit translation. Q1 2023
As Reported amounts include minimal hedge gains.
|
ADDITIONAL INFORMATION AND DISCLOSURES
Conference Call and Webcast
The Company will be holding a conference call at 2:00 p.m. Pacific time today, February 13, 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 charges related
to the impairment and abandonment of the Shankstars media game,
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 Topgolf and Active
Lifestyle segments and costs related to a cybersecurity incident.
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
associated with Jack Wolfskin retail operations in Russia and the closure of a pre-merger Topgolf
concept location.
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.
Embedded Cash Flow. The Company defines Embedded
Cash Flow as Free Cash Flow, less growth capital expenditures. The
Company defines growth capital expenditures as capital expenditures
related to the opening of additional Topgolf venues, net of
proceeds from lease financing and proceeds from government grants
or, in the case of other brands, related to new store openings and
expansions.
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.
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, and,
in some cases, financial condition, of the Company's business with
regard to these items.
For forward-looking Adjusted EBITDA, non-GAAP diluted earnings
per share, 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
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') first quarter and full year 2024 guidance (including
net revenues, Topgolf revenues, Adjusted EBITDA, Topgolf Adjusted
EBITDA, free cash flow, non-GAAP diluted earnings per share, same
venue sales growth, and diluted shares outstanding), performance
against long-term financial targets, including Topgolf venue
profitability, 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 uncertainty
regarding global economic conditions, including relating to
inflation, decreases in consumer demand and spending, and any
severe or prolonged economic downturn; 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; 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; any changes in U.S. trade, tax
or other policies, including restrictions on imports or an increase
in import tariffs; future retailer purchasing activity, which can
be significantly negatively affected by adverse industry conditions
and overall retail inventory levels; the level of promotional
activity in the marketplace; 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, 2023 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)
|
|
|
December 31,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
393.5
|
|
$
180.2
|
Restricted
cash
|
0.8
|
|
19.1
|
Accounts receivable,
net
|
200.5
|
|
167.3
|
Inventories
|
794.4
|
|
959.2
|
Other current
assets
|
238.9
|
|
193.1
|
Total current
assets
|
1,628.1
|
|
1,518.9
|
Property, plant and
equipment, net
|
2,156.5
|
|
1,809.6
|
Operating lease
right-of-use assets, net
|
1,410.1
|
|
1,419.1
|
Goodwill and intangible
assets, net
|
3,494.2
|
|
3,487.4
|
Other assets,
net
|
431.7
|
|
355.4
|
Total
assets
|
$
9,120.6
|
|
$
8,590.4
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
480.5
|
|
$
580.0
|
Accrued employee
compensation and benefits
|
113.1
|
|
135.2
|
Asset-based credit
facilities
|
54.7
|
|
219.3
|
Operating lease
liabilities, short-term
|
86.4
|
|
76.4
|
Construction
advances
|
59.3
|
|
35.4
|
Deferred
revenue
|
110.9
|
|
94.9
|
Other current
liabilities
|
42.7
|
|
35.0
|
Total current
liabilities
|
947.6
|
|
1,176.2
|
Long-term debt,
net
|
1,518.2
|
|
1,176.3
|
Long-term operating
leases
|
1,433.4
|
|
1,437.5
|
Deemed landlord
financing obligations, long-term
|
980.0
|
|
658.0
|
Deferred taxes,
net
|
36.7
|
|
117.5
|
Other long-term
liabilities
|
326.5
|
|
250.6
|
Total shareholders'
equity
|
3,878.2
|
|
3,774.3
|
Total liabilities and
shareholders' equity
|
$
9,120.6
|
|
$
8,590.4
|
TOPGOLF CALLAWAY
BRANDS CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except
per share data)
(Unaudited)
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
revenues:
|
|
|
|
|
|
|
|
Products
|
$
461.9
|
|
$
447.2
|
|
$
2,540.1
|
|
$
2,465.5
|
Services
|
435.2
|
|
404.1
|
|
1,744.7
|
|
1,530.2
|
Total net
revenues
|
897.1
|
|
851.3
|
|
4,284.8
|
|
3,995.7
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of
products
|
276.9
|
|
258.1
|
|
1,443.9
|
|
1,400.6
|
Cost of services,
excluding depreciation and amortization
|
45.4
|
|
47.7
|
|
186.8
|
|
184.0
|
Other venue
expense
|
317.6
|
|
296.7
|
|
1,252.3
|
|
1,076.9
|
Selling, general and
administrative expense
|
246.0
|
|
250.2
|
|
1,036.6
|
|
970.6
|
Research and
development expense
|
34.2
|
|
21.0
|
|
101.6
|
|
76.4
|
Venue pre-opening
costs
|
9.6
|
|
12.3
|
|
25.9
|
|
30.4
|
Total costs and
expenses
|
929.7
|
|
886.0
|
|
4,047.1
|
|
3,738.9
|
Income (loss) from
operations
|
(32.6)
|
|
(34.7)
|
|
237.7
|
|
256.8
|
Interest expense,
net
|
(56.6)
|
|
(42.5)
|
|
(210.2)
|
|
(142.8)
|
Other income,
net
|
4.9
|
|
1.0
|
|
7.3
|
|
27.9
|
Income (loss) before
taxes
|
(84.3)
|
|
(76.2)
|
|
34.8
|
|
141.9
|
Income tax
benefit
|
(7.2)
|
|
(3.5)
|
|
(60.2)
|
|
(16.0)
|
Net income
(loss)
|
$
(77.1)
|
|
$
(72.7)
|
|
$
95.0
|
|
$
157.9
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share:
|
|
|
|
|
|
|
|
Basic
|
$(0.42)
|
|
$(0.39)
|
|
$0.51
|
|
$0.85
|
Diluted
|
$(0.42)
|
|
$(0.39)
|
|
$0.50
|
|
$0.82
|
Weighted-average common
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
184.4
|
|
184.9
|
|
185.0
|
|
184.9
|
Diluted
|
184.4
|
|
184.9
|
|
201.1
|
|
201.3
|
TOPGOLF CALLAWAY
BRANDS CORP.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
(In
millions)
(Unaudited)
|
|
|
Twelve Months
Ended
December
31,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
95.0
|
|
$
157.9
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
Depreciation and amortization
|
239.7
|
|
192.8
|
Non-cash
interest on financing and deemed landlord financed
leases
|
22.8
|
|
13.8
|
Amortization of debt discount and issuance costs
|
6.5
|
|
9.8
|
Impairment
loss
|
11.7
|
|
5.5
|
Deferred
taxes, net
|
(88.9)
|
|
(31.0)
|
Non-cash share-based
compensation
|
46.7
|
|
47.0
|
Unrealized net gains
on hedging instruments and foreign currency
|
8.7
|
|
17.5
|
Loss on
debt modification
|
10.5
|
|
—
|
Other
|
1.4
|
|
(2.9)
|
Changes in assets and
liabilities, net
|
10.6
|
|
(445.5)
|
Net cash provided by
(used in) operating activities
|
364.7
|
|
(35.1)
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(482.0)
|
|
(532.3)
|
Asset
acquisitions, net of cash acquired
|
(31.2)
|
|
—
|
Business
combinations
|
(29.7)
|
|
—
|
Investment in
golf-related ventures
|
(2.5)
|
|
—
|
Acquisition of
intangible assets
|
(0.8)
|
|
(3.2)
|
Proceeds from
government grants
|
3.0
|
|
—
|
Proceeds from
sale of property and equipment
|
0.3
|
|
—
|
Proceeds from
sale of investment in golf-related ventures
|
—
|
|
0.4
|
Net cash used in
investing activities
|
(542.9)
|
|
(535.1)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings on long-term debt
|
1,224.8
|
|
176.8
|
Repayments of
long-term debt
|
(794.5)
|
|
(96.6)
|
(Repayments of)
proceeds from credit facilities, net
|
(272.4)
|
|
213.0
|
Debt issuance
costs
|
(1.8)
|
|
(0.2)
|
Repayments of
financing leases
|
(2.8)
|
|
(2.7)
|
Proceeds from
lease financing
|
274.3
|
|
175.7
|
Exercise of
stock options
|
4.2
|
|
0.7
|
Acquisition of
treasury stock
|
(56.0)
|
|
(35.8)
|
Payment on
contingent earn-out obligation
|
—
|
|
(5.6)
|
Net cash provided by
financing activities
|
375.8
|
|
425.3
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(2.2)
|
|
(9.4)
|
Net increase (decrease)
in cash, cash equivalents and restricted cash
|
195.4
|
|
(154.3)
|
Cash, cash equivalents
and restricted cash at beginning of period
|
203.4
|
|
357.7
|
Cash, cash equivalents
and restricted cash at end of period
|
$
398.8
|
|
$
203.4
|
Less: restricted
cash(1)
|
(5.3)
|
|
(23.2)
|
Cash and cash
equivalents at end of period
|
$
393.5
|
|
$
180.2
|
|
|
|
|
(1) Includes
$0.8 million and $19.1 million of short-term restricted cash and
$4.5 million and $4.1 million of long-term restricted cash included
in other assets for the periods ended December 31, 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
December
31,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
Venues
|
$
422.2
|
|
$
387.7
|
|
$
34.5
|
|
8.9 %
|
|
8.7 %
|
Topgolf other business
lines
|
16.8
|
|
21.8
|
|
(5.0)
|
|
(22.9 %)
|
|
(23.9 %)
|
Golf Clubs
|
160.2
|
|
137.5
|
|
22.7
|
|
16.5 %
|
|
16.2 %
|
Golf Balls
|
39.2
|
|
52.5
|
|
(13.3)
|
|
(25.3 %)
|
|
(25.7 %)
|
Apparel
|
181.9
|
|
175.0
|
|
6.9
|
|
3.9 %
|
|
2.6 %
|
Gear, Accessories
& Other
|
76.8
|
|
76.8
|
|
—
|
|
— %
|
|
(1.8 %)
|
Total net
revenues
|
$
897.1
|
|
$
851.3
|
|
$
45.8
|
|
5.4 %
|
|
4.8 %
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2022 exchange rates to 2023 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues by
Region
|
|
Three Months
Ended
December
31,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
United
States
|
$
646.3
|
|
$
603.3
|
|
$
43.0
|
|
7.1 %
|
|
7.1 %
|
Europe
|
117.3
|
|
119.7
|
|
(2.4)
|
|
(2.0 %)
|
|
(7.4 %)
|
Asia
|
112.8
|
|
112.8
|
|
—
|
|
— %
|
|
1.1 %
|
Rest of
world
|
20.7
|
|
15.5
|
|
5.2
|
|
33.5 %
|
|
34.2 %
|
Total net
revenues
|
$
897.1
|
|
$
851.3
|
|
$
45.8
|
|
5.4 %
|
|
4.8 %
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2022 exchange rates to 2023 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
Three Months
Ended
December
31,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
439.0
|
|
$
409.5
|
|
$
29.5
|
|
7.2 %
|
|
7.0 %
|
Golf
Equipment
|
199.4
|
|
190.0
|
|
9.4
|
|
4.9 %
|
|
4.6 %
|
Active
Lifestyle
|
258.7
|
|
251.8
|
|
6.9
|
|
2.7 %
|
|
1.3 %
|
Total net
revenues
|
$
897.1
|
|
$
851.3
|
|
$
45.8
|
|
5.4 %
|
|
4.8 %
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
23.1
|
|
$
2.5
|
|
$
20.6
|
|
n/m
|
|
|
Golf
Equipment
|
(19.9)
|
|
0.7
|
|
(20.6)
|
|
n/m
|
|
|
Active
Lifestyle
|
20.2
|
|
0.1
|
|
20.1
|
|
n/m
|
|
|
Total segment operating
income
|
23.4
|
|
3.3
|
|
20.1
|
|
n/m
|
|
|
Corporate G&A and
other(2)
|
(56.0)
|
|
(38.0)
|
|
(18.0)
|
|
47.4 %
|
|
|
Total operating
loss
|
(32.6)
|
|
(34.7)
|
|
2.1
|
|
(6.1 %)
|
|
|
Interest expense,
net
|
(56.6)
|
|
(42.5)
|
|
(14.1)
|
|
33.2 %
|
|
|
Other income,
net
|
4.9
|
|
1.0
|
|
3.9
|
|
n/m
|
|
|
Total loss before
income taxes
|
$
(84.3)
|
|
$
(76.2)
|
|
$
(8.1)
|
|
10.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
Twelve Months
Ended
December
31,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
Venues
|
$
1,692.6
|
|
$
1,477.1
|
|
$
215.5
|
|
14.6 %
|
|
14.6 %
|
Topgolf other business
lines
|
68.4
|
|
71.9
|
|
(3.5)
|
|
(4.9 %)
|
|
(4.0 %)
|
Golf Clubs
|
1,073.5
|
|
1,097.1
|
|
(23.6)
|
|
(2.2 %)
|
|
(0.5 %)
|
Golf Balls
|
314.0
|
|
309.5
|
|
4.5
|
|
1.5 %
|
|
2.2 %
|
Apparel
|
713.2
|
|
631.7
|
|
81.5
|
|
12.9 %
|
|
13.5 %
|
Gear, Accessories
& Other
|
423.1
|
|
408.4
|
|
14.7
|
|
3.6 %
|
|
3.8 %
|
Total net
revenues
|
$
4,284.8
|
|
$
3,995.7
|
|
$
289.1
|
|
7.2 %
|
|
7.9 %
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2022 exchange rates to 2023 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues by
Region
|
|
Twelve Months
Ended
December
31,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
United
States
|
$
3,081.4
|
|
$
2,798.0
|
|
$
283.4
|
|
10.1 %
|
|
10.1 %
|
Europe
|
540.6
|
|
537.4
|
|
3.2
|
|
0.6 %
|
|
(1.0 %)
|
Asia
|
531.9
|
|
545.4
|
|
(13.5)
|
|
(2.5 %)
|
|
2.7 %
|
Rest of
world
|
130.9
|
|
114.9
|
|
16.0
|
|
13.9 %
|
|
19.0 %
|
Total net
revenues
|
$
4,284.8
|
|
$
3,995.7
|
|
$
289.1
|
|
7.2 %
|
|
7.9 %
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2022 exchange rates to 2023 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
Twelve Months
Ended
December
31,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs.
2022(1)
|
|
2023
|
|
2022
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
1,761.0
|
|
$
1,549.0
|
|
$
212.0
|
|
13.7 %
|
|
13.7 %
|
Golf
Equipment
|
1,387.5
|
|
1,406.6
|
|
(19.1)
|
|
(1.4 %)
|
|
0.1 %
|
Active
Lifestyle
|
1,136.3
|
|
1,040.1
|
|
96.2
|
|
9.2 %
|
|
9.7 %
|
Total net
revenues
|
$
4,284.8
|
|
$
3,995.7
|
|
$
289.1
|
|
7.2 %
|
|
7.9 %
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
108.8
|
|
$
76.8
|
|
$
32.0
|
|
41.7 %
|
|
|
Golf
Equipment
|
193.3
|
|
251.4
|
|
(58.1)
|
|
(23.1 %)
|
|
|
Active
Lifestyle
|
117.0
|
|
77.4
|
|
39.6
|
|
51.2 %
|
|
|
Total segment operating
income
|
419.1
|
|
405.6
|
|
13.5
|
|
3.3 %
|
|
|
Corporate costs and
expenses(2)
|
(181.4)
|
|
(148.8)
|
|
(32.6)
|
|
21.9 %
|
|
|
Total operating
income
|
237.7
|
|
256.8
|
|
(19.1)
|
|
(7.4 %)
|
|
|
Interest expense,
net
|
(210.2)
|
|
(142.8)
|
|
(67.4)
|
|
47.2 %
|
|
|
Other income,
net
|
7.3
|
|
27.9
|
|
(20.6)
|
|
(73.8 %)
|
|
|
Total income before
income taxes
|
$
34.8
|
|
$
141.9
|
|
$
(107.1)
|
|
(75.5 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
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
|
$
897.1
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
897.1
|
|
$
851.3
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
851.3
|
Total costs and
expenses
|
929.7
|
|
4.9
|
|
21.1
|
|
—
|
|
903.7
|
|
886.0
|
|
6.7
|
|
3.1
|
|
—
|
|
876.2
|
Loss from
operations
|
(32.6)
|
|
(4.9)
|
|
(21.1)
|
|
—
|
|
(6.6)
|
|
(34.7)
|
|
(6.7)
|
|
(3.1)
|
|
—
|
|
(24.9)
|
Other expense,
net
|
(51.7)
|
|
—
|
|
—
|
|
—
|
|
(51.7)
|
|
(41.5)
|
|
(0.9)
|
|
(0.3)
|
|
—
|
|
(40.3)
|
Loss before income
taxes
|
(84.3)
|
|
(4.9)
|
|
(21.1)
|
|
—
|
|
(58.3)
|
|
(76.2)
|
|
(7.6)
|
|
(3.4)
|
|
—
|
|
(65.2)
|
Income tax (benefit)
provision
|
(7.2)
|
|
(1.2)
|
|
(5.0)
|
|
1.1
|
|
(2.1)
|
|
(3.5)
|
|
(1.8)
|
|
(0.9)
|
|
13.6
|
|
(14.4)
|
Net loss
|
$
(77.1)
|
|
$
(3.7)
|
|
$
(16.1)
|
|
$
(1.1)
|
|
$
(56.2)
|
|
$
(72.7)
|
|
$
(5.8)
|
|
$
(2.5)
|
|
$
(13.6)
|
|
$
(50.8)
|
Loss per share -
diluted
|
$
(0.42)
|
|
$
(0.02)
|
|
$
(0.09)
|
|
$
(0.01)
|
|
$
(0.30)
|
|
$
(0.39)
|
|
$
(0.03)
|
|
$
(0.01)
|
|
$
(0.08)
|
|
$
(0.27)
|
Weighted-average shares
outstanding - diluted
|
184.4
|
|
184.4
|
|
184.4
|
|
184.4
|
|
184.4
|
|
184.9
|
|
184.9
|
|
184.9
|
|
184.9
|
|
184.9
|
|
(1)
Includes amortization and depreciation of acquired intangible
assets and purchase accounting adjustments related to
acquisitions.
|
(2)
Primarily includes $12.7 million of total charges related to the
impairment and abandonment of the Shankstars media game in the
Topgolf segment, $6.5 million of total reorganization costs in the
Topgolf and Active Lifestyle segments, and $0.9 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 $2.4 million of IT integration and
implementation costs primarily related to the Topgolf merger, and
$0.9 million of reorganization expenses at Topgolf.
|
|
Twelve months ended
December 31,
|
|
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
|
$
4,284.8
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
4,284.8
|
|
$
3,995.7
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
3,995.7
|
Total costs and
expenses
|
4,047.1
|
|
24.9
|
|
37.5
|
|
—
|
|
3,984.7
|
|
3,738.9
|
|
25.0
|
|
15.5
|
|
—
|
|
3,698.4
|
Income (loss) from
operations
|
237.7
|
|
(24.9)
|
|
(37.5)
|
|
—
|
|
300.1
|
|
256.8
|
|
(25.0)
|
|
(15.5)
|
|
—
|
|
297.3
|
Other expense,
net
|
(202.9)
|
|
(0.6)
|
|
(10.8)
|
|
—
|
|
(191.5)
|
|
(114.9)
|
|
(3.7)
|
|
(1.2)
|
|
—
|
|
(110.0)
|
Income (loss) before
income taxes
|
34.8
|
|
(25.5)
|
|
(48.3)
|
|
—
|
|
108.6
|
|
141.9
|
|
(28.7)
|
|
(16.7)
|
|
—
|
|
187.3
|
Income tax (benefit)
provision
|
(60.2)
|
|
(6.1)
|
|
(11.4)
|
|
(58.3)
|
|
15.6
|
|
(16.0)
|
|
(6.9)
|
|
(3.8)
|
|
(34.4)
|
|
29.1
|
Net income
(loss)
|
$
95.0
|
|
$
(19.4)
|
|
$
(36.9)
|
|
$
58.3
|
|
$
93.0
|
|
$
157.9
|
|
$
(21.8)
|
|
$
(12.9)
|
|
$
34.4
|
|
$
158.2
|
Earnings (loss) per
share - diluted(5)
|
$
0.50
|
|
$
(0.10)
|
|
$
(0.18)
|
|
$
0.29
|
|
$
0.49
|
|
$
0.82
|
|
$
(0.11)
|
|
$
(0.06)
|
|
$
0.17
|
|
$
0.82
|
Weighted-average shares
outstanding - diluted
|
201.1
|
|
201.1
|
|
201.1
|
|
201.1
|
|
201.1
|
|
201.3
|
|
201.3
|
|
201.3
|
|
201.3
|
|
201.3
|
|
(1)
Includes amortization and depreciation of acquired intangible
assets and purchase accounting adjustments related to
acquisitions.
|
(2)
Primarily includes $12.7 million in total charges related to the
impairment and abandonment of the Shankstars media game in the
Topgolf segment, $12.3 million of total reorganization costs in the
Topgolf and Active Lifestyle segments, $13.7 million in total
charges related to our 2023 debt modification, $4.2 million in IT
integration and implementation costs primarily related to the
Topgolf merger, and $2.4 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 $5.7 million in non-cash asset write-downs
related to the suspension of our Jack Wolfskin retail operations in
Russia and the closure of a pre-merger Topgolf concept location,
$5.9 million in IT integration and implementation costs primarily
related to the Topgolf merger, and $3.6 million in legal and credit
agency fees related to a postponed debt refinancing, and $0.9
million for reorganization expenses.
|
(5)
Diluted earnings per share calculated using the if-converted
method, which excludes periodic interest expense related to the
2020 convertible notes 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
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
|
|
March
31,
|
|
June
30,
|
|
September
30,
|
|
December
31,
|
|
|
|
2023
|
|
2023
|
|
2023
|
|
2023
|
|
Total
|
|
2022
|
|
2022
|
|
2022
|
|
2022
|
|
Total
|
Net income
(loss)
|
$
25.0
|
|
$
117.4
|
|
$
29.7
|
|
$
(77.1)
|
|
$
95.0
|
|
$
86.7
|
|
$
105.4
|
|
$
38.5
|
|
$
(72.7)
|
|
$ 157.9
|
Interest expense,
net
|
49.6
|
|
51.7
|
|
52.3
|
|
56.6
|
|
210.2
|
|
31.4
|
|
32.5
|
|
36.4
|
|
42.5
|
|
142.8
|
Income tax (benefit)
provision
|
(4.2)
|
|
(45.8)
|
|
(3.0)
|
|
(7.2)
|
|
(60.2)
|
|
(15.7)
|
|
2.9
|
|
0.3
|
|
(3.5)
|
|
(16.0)
|
Non-cash depreciation
and amortization expense
|
56.1
|
|
58.6
|
|
61.0
|
|
64.0
|
|
239.7
|
|
42.5
|
|
48.9
|
|
48.4
|
|
53.0
|
|
192.8
|
Non-cash stock
compensation and stock warrant expense, net
|
12.5
|
|
12.3
|
|
13.2
|
|
8.4
|
|
46.4
|
|
14.5
|
|
11.6
|
|
10.3
|
|
9.7
|
|
46.1
|
Non-cash lease
amortization expense
|
4.6
|
|
4.4
|
|
4.5
|
|
4.4
|
|
17.9
|
|
3.5
|
|
6.6
|
|
4.4
|
|
4.5
|
|
19.0
|
Acquisitions &
non-recurring items, before taxes(1)
|
13.7
|
|
7.6
|
|
5.6
|
|
20.7
|
|
47.6
|
|
6.9
|
|
(0.6)
|
|
6.1
|
|
3.1
|
|
15.5
|
Adjusted
EBITDA
|
$
157.3
|
|
$
206.2
|
|
$
163.3
|
|
$
69.8
|
|
$ 596.6
|
|
$
169.8
|
|
$
207.3
|
|
$
144.4
|
|
$
36.6
|
|
$ 558.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In 2023,
amounts include charges related to the impairment and abandonment
of the Shankstars media game, charges in connection with the 2023
debt modification, IT integration and implementation costs stemming
primarily from the merger with Topgolf, restructuring and
reorganization charges in our Topgolf and Active Lifestyle
segments, and costs related to a cybersecurity incident. In 2022,
amounts include non-cash asset write-downs associated with the Jack
Wolfskin retail operations in Russia and the closure of a
pre-merger Topgolf concept location, both due to business decisions
to exit those businesses, costs associated with the implementation
of new IT systems for Topgolf, and legal costs and credit agency
fees related to a postponed debt refinancing.
|
Reconciliation of
Consolidated Non-GAAP Free Cash Flow & Embedded Cash
Flow
|
Twelve Months
Ended
December 31, 2023
|
|
2023
|
|
2022
|
GAAP cash flows from
operations (1)
|
$
364.7
|
|
$
(35.1)
|
Less: capital
expenditures (1)
|
(482.0)
|
|
(532.3)
|
Add: proceeds from
financing arrangements & government
grants(1)
|
277.3
|
|
175.7
|
Consolidated
Non-GAAP Free Cash Flow
|
$
160.0
|
|
$
(391.7)
|
Growth capital
expenditures, net of proceeds and
reimbursements(2)
|
61.2
|
|
202.6
|
Consolidated
Non-GAAP Embedded Cash Flow(2)
|
$
221.2
|
|
$
(189.1)
|
|
|
|
|
(1) Source:
Consolidated statement of cash flows within the Company's annual
Report on Form 10-K
|
(2) See
additional information and disclosures for definitions of Growth
Capital Expenditures and Non-GAAP Embedded Cash Flows.
|
TOPGOLF CALLAWAY
BRANDS CORP.
TOPGOLF NON-GAAP
RECONCILIATION AND SUPPLEMENTAL FINANCIAL
INFORMATION
(Unaudited)
(In
millions)
|
|
Reconciliation of
Topgolf Adjusted Segment EBITDA
|
Three Months
Ended
December 31, 2023
|
|
Twelve Months
Ended
December 31, 2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Topgolf Segment
operating income(1):
|
$
23.1
|
|
$
2.5
|
|
$
108.8
|
|
$
76.8
|
Non-GAAP depreciation
and amortization expense
|
45.4
|
|
34.5
|
|
164.9
|
|
125.2
|
Non-cash stock
compensation expense
|
0.5
|
|
1.5
|
|
12.9
|
|
15.2
|
Non-cash lease
amortization expense
|
3.9
|
|
4.8
|
|
17.1
|
|
19.6
|
Other expense (income),
net
|
0.3
|
|
(0.1)
|
|
0.6
|
|
(1.4)
|
Topgolf Adjusted
Segment EBITDA
|
$
73.2
|
|
$
43.2
|
|
$
304.3
|
|
$
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.