Topgolf Callaway Brands has lifted annual guidance after a record third quarter and said it continues to see the Topgolf operation as a key driver of growth that will contribute half of the company’s Ebitda in the near future. Group net revenue for the three months to Sept. 30 was up 15 percent to a record $989 million. Adjusted Ebitda rose 4 percent to $144 million, and net income swung to a profit of $38.5 million from a loss of $16 million a year ago.
The Topgolf segment contributed sales of $414 million, a 24 percent increase year on year, as more people used its venues for social occasions and the company added new locations. It is also embarking on a major marketing campaign in select markets in the final quarter of this year, with a nationwide rollout early next year. CEO Chip Brewer believes the segment can deliver at least 10 percent growth in same-venue sales for the fourth quarter and said investing in the Topgolf venues continues to be the primary use of capital, with a target to open 11 new venues annually. “We remain confident that off-course golf will continue to be a key driver of growth in the modern golf ecosystem and, as our recent rebrand suggests, Topgolf is expected to be an even larger contributor to both top-line and bottom-line growth,” he added. The company is also investing in its Toptracer operation, where players can track the flight of an ordinary golf ball at a driving range. It installed 1,600 bays during the quarter and aims to put in up to 8,000 for the full year.
Golf equipment revenue growth of 2.5 percent to $297 million was driven by continued high demand and improved supply. In the Active Lifestyle segment, where the company runs the Jack Wolfskin and TravisMathew apparel brands, sales were up 19.3 percent to $278 million, with the latter experiencing another promising pre-book season for Spring/Summer 2023.
Full-year guidance was raised to $3.96 billion to $3.98 billion from $3.94 billion to $3.97 billion, including around $150 million of forex headwinds, up $21 million from previous estimates. Adjusted Ebitda is forecast to be $560 million to 570 million from $555 million to $565 million.
Brewer was upbeat about the group’s future prospects, despite macroeconomic concerns and inflation. He said the company’s customers are “passionate” about all its offerings and products and “generally have the means and desire to continue to enjoy these activities, even amid inflationary pressure or mild economic downturns.”
Looking ahead across the segments, Topgolf segment revenue is expected to be $1.56 billion and $240 million to $250 million of adjusted Ebitda, Golf Equipment revenue was tipped for growth of 12 percent or more and Active Lifestyle segment revenue should hit $1 billion.
