Callaway Golf Company (CALY) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $62 million (GAAP), $83 million (non-GAAP), and adjusted EBITDA reached $206 million, all ahead of expectations, while consolidated revenues declined 1.9% year-over-year to $1.158 billion.

• A formal strategic review of Topgolf was announced, considering both organic and inorganic alternatives, including a potential spin-off, due to underperformance in stock and recent same-venue sales.

• Maintained #1 U.S. market share in drivers, fairway woods, irons, and achieved record share in premium golf balls.

• First half cash from operations improved by $173 million year-over-year; $50 million discretionary term loan paydown completed.

• Full-year revenue and adjusted EBITDA guidance were lowered, reflecting continued softness in Topgolf and cautious consumer trends.

Financial highlights

• Q2 net revenues: $1,157.8 million, down 1.9% year-over-year; Q2 adjusted EBITDA: $205.6 million, nearly flat year-over-year and above guidance.

• Q2 GAAP net income: $62.1 million, down 47.1% year-over-year; non-GAAP net income: $83.1 million, up 9.9%; GAAP EPS: $0.32, non-GAAP EPS: $0.42.

• Q2 operating income: $103.0 million, down 11.2% year-over-year.

• Inventory decreased $192.7 million year-over-year to $647.1 million; available liquidity up $136 million to $784 million.

• Cash and cash equivalents at June 30, 2024: $317.1 million.

Outlook and guidance

• Full-year 2024 revenue guidance lowered to $4,200–$4,260 million; adjusted EBITDA guidance reduced to $570–$590 million.

• Topgolf same venue sales expected to decline high single to low double digits; Topgolf adjusted EBITDA outlook at ~$310 million.

• Q3 2024 revenue guidance: $970–$990 million; adjusted EBITDA: $95–$105 million.

• Golf equipment expected to be flat year-over-year; active lifestyle segment revenue and operating income expected to be down.

• Management expects to complete restructuring by Q4 2024, with total costs of $35–$40 million.