Callaway Golf Company (CALY) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue rose 7.2% to $4,284.8M; consolidated Free Cash Flow was $160M and Embedded Cash Flow was $221M.

• Q4 revenue increased 5.4% to $897.1M across all three segments; Adjusted EBITDA rose 90.7% to $69.8M.

• FY 2024 outlook calls for revenue and Adjusted EBITDA growth amid potential consumer softness and FX headwinds.

Financial highlights

• FY 2023 non-GAAP net income was $93.0M, down 41.2%; GAAP net income was $95.0M vs. $157.9M, with diluted EPS of $0.50 vs. $0.82.

• Q4 GAAP operating loss improved to $32.6M from $34.7M; GAAP net loss widened to $77.1M from $72.7M, and diluted loss per share was $0.42 vs. $0.39.

• Adjusted EBITDA rose 6.9% to $596.6M for FY 2023 and 90.7% to $69.8M in Q4.

• FY 2023 reported segment operating income was $419.1M, up 3.3%: Topgolf $108.8M, Golf Equipment $193.3M and Active Lifestyle $117.0M.

• Cash provided by operations was $364.7M vs. cash used of $35.1M in 2022, primarily reflecting working-capital improvement.

Outlook and guidance

• FY 2024 guidance: revenue $4,515M–$4,555M, Adjusted EBITDA $620M–$640M and non-GAAP diluted EPS $0.26–$0.34.

• Topgolf FY 2024 outlook: revenue ~$1.96B, Adjusted EBITDA ~$350M and Same Venue Sales approximately flat.

• Q1 2024 guidance: revenue $1,140M–$1,160M and Adjusted EBITDA $130M–$140M; Same Venue Sales expected to decline high single digits.

• FY 2024 total-company Free Cash Flow outlook is ~$105M and Embedded Cash Flow ~$225M; illustrative 2026 Adjusted EBITDA exceeds $800M and Embedded Cash Flow is ~$325M.

• FY 2024 outlook includes ~$20M of pre-tax FX headwinds, including $10M unfavorable to revenue and $6.5M unfavorable to profit translation.