Topgolf Callaway’s Q2 results are on-track to reaffirm the groups full year 2023 revenue. President and CEO Chip Brewer has said in a statement he is “Particularly pleased with market share gains in Golf Equipment and the continued strength of Topgolf’s venue business.”
Net income and US sales up
Net income, benefitting from a $45.8 million income tax benefit, rose by 11.4 percent to $117.4 million from $105.4 million in Q2 ended June 30. Operating income declined by 10 percent to $116.0 million and Ebit was down by 34 percent to $71.6 million. Combined products and services revenues rose by 5.7 percent to $1,179.7 million from $1,115.7 million.
Sales in the U.S. rose by 11 percent to $886.7 million but fell by 15.5 percent in Europe to $120.2 million. Sales in Asia were essentially flat at $128.2 million, while Rest of World increased by 21 percent to $44.6 million.
Topgolf revenues increased by 17 percent to $470.8 million, driven by new venues and same venue sales growth of 1 percent, within the company’s guidance range and up by 9 percent on a two-year stack basis.
Venues face “slightly less challenging” rest of year
Topgolf’s Q2 operating income was basically flat year-over-year at $44.0 million. Adjusted Ebitda rose by 6.7 percent to $92.1 million on the higher revenues and improved operational efficiencies at venues.
The company is on track to open 11 Topgolf venues this year and the segment will face a “slightly less challenging” comp in H2 than in Q2. A new marketing campaign is slated to launch later in August.
Currency headwinds of $5.5 million coupled with the lack of a retail fill-in business that occurred in Q2/22 offset higher ball sales in the Callaway golf segment. Revenues swung 1 percent higher on a constant-currency basis to $451.0 million, but segment operating income slipped 3.9 percent to $96.4 million due to planned operational costs. Segment gross margin improved due to lower freight costs and higher product prices.
The active lifestyle segment produced flat year-over-year sales on a constant-currency basis to $257.9 million related to the timing of wholesale shipments to Europe in H1 offset by double-digit sales growth at TravisMathew.
Without offering specifics, the company said Jack Wolfskin remains on track for sales and profitability growth in FY23. H1 segment sales were up 13.3 percent. But planned operating investments contributed to a 13 percent decline in operating income to $19.5 million.
CEO “remains confident”
With the results, Topgolf Callaway maintained the FY guidance it set in early May. It calls for full-year, diluted EPS of $0.63 to $0.69, consolidated adjusted Ebitda of $625 to $640 million, and a consolidated net revenue range of $4.42 to $4.47 billion.
Brewer again: “Looking ahead, we believe that our unique and attractive portfolio of leading brands continues to be very well-positioned to benefit from the sustained momentum in both off-course and on-course golf. We continue to track ahead of our long-term performance targets for the business and remain confident in delivering positive free cash flow for Topgolf and the total Company in 2023.”
