Topgolf Callaway, which is working on several synergistic strategies to connect and grow its various businesses, is forecasting modest cash flow growth this year before it ramps up between 2025 and 2028 and bolsters earnings per share expansion starting next year. Despite currency headwinds and a difficult year-over-year comparison for its Topgolf business, the group is forecasting consolidated net revenue growth of 6 percent this year to between $4.515 to $4.555 billion and consolidated adjusted ebitda year-over-year expansion of 3.9 to 7.2 percent to a range of $620 to $640 million. Topgolf’s annual revenues, thanks to new venues, are forecast to grow by 11.3 percent to about $1.96 billion as same venue growth is about flat.
Shares in the company rose 11.6 percent to close at $15.10 on Feb. 13, following the updated guidance and reporting of Q4 and FY23 results.
Net revenues rose by 5.4 percent in the final period to $897.1 million as the year-over-year operating loss contracted by 6 percent to $32.6 million from a loss of $34.7 million. The Q4 net loss was $77.1 million versus $72.7 million. Topgolf, which opened eight new venues in Q4 and intends to add seven more in 2024, generated 7.0 percent constant currency sales growth to $439.0 million and adjusted Ebitda of $73.2 million. Operating income was $23.1 million.
Meanwhile, Q4 golf equipment sales swung 4.9 percent higher to $199.4 million thanks to new club launches that were partly offset by lower ball sales, The segment operating loss was $19.9 million. The Active Lifestyle segment, which includes TravisMathew, generated a 2.7 percent sales gain to $258.7 million and $20.2 million of operating income against $100,000 in the year-ago period.
The company’s initiatives to tie its various businesses together in the coming months and grow sales across the board include putting TravisMathew products on sale at approximately one-third of Topgolf venues, adding a Callaway branded digital kiosks at all venues this year, and starting a program where all Topgolf players can upgrade to Callaway branded clubs.
For FY23, group operating income slipped by 7.4 percent to $237.7 million as net revenues grew by 7.2 percent to $4.28 billion. Annual net income fell by 40 percent to $95.0 million from $157.9 million. The year-over-year inventory level declined by 17 percent to $794 million.
While annual golf equipment sales were essentially flat at $1.39 billion, Topgolf annual revenues expanded by 13.7 percent to $1.76 billion and Active Lifestyle segment sales increased by 9.7 percent to $1.14 billion as it expanded its margins. TravisMathew, which bolstered the segment’s sales and profit gain for the year, opened stores and entered women’s apparel. This year, the brand will open 8-10 stores and begin to slowly expand its international footprint.
