Q1 Monetary Reviews: Callaway and Acushnet – Key Takeaways
- Callaway Q1 gross sales prime $1 billion with internet revenue of practically $87 million.
- Acushnet Q1 gross sales attain $606 million with $81 million internet revenue.
- Callaway registers a file 22-percent market share in golf balls in March.
- Titleist ball gross sales down for Q1 as a consequence of uncooked materials shortages.
The Callaway and Acushnet Q1 monetary experiences are out and, as at all times, the satan is within the particulars.
On the floor, you see Callaway leaving Acushnet within the mud as its quarterly gross sales topped the $1-BILLION mark in comparison with “simply” $606 million for Acushnet. However when you dive a bit of deeper, which is what we love to do, you see two corporations on divergent paths.
Callaway is morphing right into a golf life-style and leisure behemoth whereas Acushnet continues to hone its conventional golf enterprise. The distinction between golf’s two giants is as stark as it’s large. However when one peels again the proverbial onion, one would possibly simply discover the 2 corporations are extra related than they’re completely different.
However earlier than we dive in, it’s time for our commonplace disclaimer. We’re not, nor will we declare to be, monetary consultants or funding counselors. We’re of us who love golf—each the sport and the enterprise—and we wish to learn.
Q1 Monetary Reviews: Callaway
Until your title is Musk or Bezos, $1.04 BILLION in quarterly gross sales ought to rock your world. Callaway certainly seems pleased with it.
“I’m happy to report a really robust begin to the yr with all three of our enterprise segments contributing to our success,” says Callaway CEPO Chip Brewer. “Whole income was … up 60 % yr over yr.”
That 60-percent enhance comes with a wee little bit of an asterisk. Callaway merged with Topgolf on March 8 of final yr so the Q1 2021 numbers included lower than one month of Topgolf income. This yr, for the complete quarter, Topgolf added $322 million to Callaway’s top-line gross sales quantity.
Moreover, Callaway experiences an almost $87 million internet revenue for Q1. That’s an enormous drop from final yr’s Q1 revenue of $272 million however that quantity is inflated because of the non-cash addition of Topgolf. Taking the acquisition out of the equation, earnings are nonetheless down by roughly $7 million in comparison with final yr regardless of the upper gross sales. That drop is comprehensible as provide chain points and delivery prices proceed to make life depressing for finance departments worldwide.
The Topgolf Impact
Final yr’s Topgolf acquisition is placing Callaway into its personal golf stratosphere. The corporate initiatives upwards of $1.56 BILLION in 2022 income from Topgolf alone and that ain’t no alfalfa seed, pal. The $322 million in Q1 displays a pleasant same-venue enhance over Topgolf’s pre-pandemic 2019 numbers even though 2022 received off to a sluggish begin because of the Omicron variant.
Callaway says walk-in visitors is getting more healthy as are particular occasion and company bookings. Two new services opened in Q1, a Callaway-owned and -operated middle in Southern California and a franchise venue in Germany. Callaway expects to open 11 services within the U.S. this yr, with 5 extra scheduled in This autumn.
Moreover, Callaway expects so as to add Toptracer expertise to not less than 8,000 driving vary bays this yr.
Oddly, regardless of the large top-line numbers, Topgolf earnings had been comparatively small. That $322 million in gross sales added solely $6.5 million to the underside line, for a revenue margin of solely two %. Little doubt capital prices for brand spanking new venues in addition to servicing the acquisition debt contributed to the comparatively low margin.
Q1 Monetary Report: Golf equipment, Balls and Attire
Callaway offered greater than $468 million value of golf golf equipment and balls in Q1, a 24-percent year-over-year enhance. Particularly, membership gross sales reached $370 million (up 17 % YOY) whereas golf ball gross sales hit practically $98 million. That’s up 37 % from final yr. Moreover, Callaway is citing Golf Datatech figures exhibiting it hit an all-time excessive in ball market share in March, at 22 %.
And since you wish to know, Callaway’s revenue margin on golf gear in Q1 stands at 21.5 %. That’s down a full proportion level from Q1 of final yr.
Attire, Gear and Different (baggage, gloves, equipment) added $250 million in gross sales to the highest line, at an almost 11-percent revenue margin. Attire gross sales had been up 45 % whereas Gear and Different had been up 29 %. These figures embrace a $4-million hit after Callaway suspended Jack Wolfskin retail operations in Russia because of the Russia-Ukraine battle.
Callaway does count on this phase to succeed in $1 billion in gross sales in 2022.
And likewise since you wish to know, Callaway spent $17.5 million on R&D in Q1 or roughly 1.6 % of gross sales. Promoting, Normal and Administrative prices—stuff like mounted and variable overhead, commissions, salaries, delivery and advertising—reached $243 million or 23 % of gross sales.
Q1 Monetary Reviews: Acushnet
True to its historical past, Acushnet by no means publishes grandiose headlines in its financial reports. Acushnet’s Q1 gross sales topped $606 million which is a small 4.3-percent enhance over final yr.
Moreover, Acushnet says its quarterly internet earnings of $81 million is down practically 5 % year-over-year. On prime of that, U.S. gross sales are down 4.4 % as a consequence of a drop in ball gross sales and a drop in bag, hat and different gear gross sales.
Name it the Scourge of the Provide Chain.
Particularly, Titleist ball gross sales are down 5.6 % globally (roughly $10.6 million) as a consequence of uncooked materials shortages. Gear gross sales fell off by practically $5 million, once more as a consequence of provide chain points.
Based mostly on the 2 experiences, and Callaway’s 37-percent enhance in ball gross sales, it’s truthful to say Callaway has completed a greater job managing its provide chain.
Section Specifics
Titleist membership gross sales reached $161 million in Q1, a slight 3.2-percent enhance. The soar was pushed by the brand new Vokey SM9 wedges launched in Q1 together with the brand new T-Sequence irons launched in This autumn final yr. Metalwood gross sales had been down as the present fashions enter their second yr, whereas Acushnet says delivery delays and provide chain shortages additionally contributed.
As talked about, ball gross sales had been down 5.6 % in comparison with Q1 of final yr, reaching $164 million.
Provide chain challenges additionally led to a 17-percent drop in Golf Gear gross sales, particularly in baggage and hats. That drop was partially offset by larger promoting costs.
The information isn’t all unhealthy, nevertheless. FootJoy had a smoking Q1 with gross sales topping $197 million. That’s a 24-percent hike over final yr. Acushnet cites each larger volumes and better promoting costs for the rise, together with a really robust exhibiting within the European market.
Regionally, U.S. gross sales reached $295 million (down 4.4 %) whereas European gross sales had been up practically 40 % at $112 million. Japan was down 19 % whereas the Korean and Remainder of World markets elevated by eight and 19 %, respectively.
And since you wish to know, Acushnet spent $14 million in Q1 on R&D or roughly 2.3 % of gross sales. Promoting, Normal and Administrative prices topped $196 million, 32 % of gross sales.
What Does It All Imply?
You would possibly have a look at Acushnet’s numbers and suppose issues aren’t trying so sizzling. That’s not totally true but it surely’s not totally false, both. Yeah, uncooked materials shortages and provide chain challenges seem like extra of an issue for Acushnet than for Callaway. And, yeah, going backward in ball gross sales at all times sucks. However $606 million continues to be $606 million and $81 million in earnings within the face of rising delivery prices and different challenges definitely makes it sting rather less.
Of their 2021 annual experiences, each corporations projected comparatively modest positive factors for 2022. Callaway is feeling a little more bullish after Q1 and isn’t projecting gross sales to be within the $3.9-billion vary. Acushnet, alternatively, is holding regular on its 2022 projection of roughly $2.2 billion. Neither firm is anticipating a worsening of the pandemic or provide chain disruptions.
The highest line says Callaway is operating a one-man race and is leaving Acushnet within the mud. That’s true, however when you take away non-traditional golf enterprise from the equation—i.e., Topgolf and Jack Wolfskin—the 2 corporations are nearer than you suppose. With out Topgolf, Callaway’s Q1 gross sales are roughly $611 million. It’s unimaginable to find out Jack Wolfskin’s quarterly gross sales however when you take that out of the equation, the businesses can be in a digital lifeless warmth. Callaway is the clear chief in membership gross sales. Acushnet, regardless of the down quarter, nonetheless owns the ball market.
However in actuality, you’ll be able to’t take Topgolf out of the equation. And, because of this, Callaway is enjoying a totally completely different recreation.
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