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The Q2 monetary stories for Topgolf Callaway and Acushnet have all the time been a contrast in styles. However for the second quarter of this yr, one firm is main with an almost five-percent year-over-year gross sales progress.
The opposite says its outcomes “reaffirm 2023 income and adjusted EBITDA steerage.”
Care to make any guesses which is which?
Each firms have historically led with gross sales numbers, proportion will increase and rising internet income – you recognize, the attractive stuff that will get traders all gooey with anticipation. However for the second quarter in a row, it’s Topgolf Callaway with the muted quarterly outcomes announcement.
Not that the precise numbers are scary or something but it surely begs a easy query:
Why the change?
We’re going to dive into each firms’ Q2 monetary stories however we first wish to ship our commonplace disclaimer.
We’re not, nor will we declare to be, monetary specialists, funding counselors or Wall Road-level enterprise analysts. We’re merely golf trade geeks who wish to learn.
Now that we’ve that out of the way in which, let’s have a look at the books.
Q2 Monetary Stories: Acushnet
The large headline for Acushnet is its sales number. The corporate topped $689 million for Q2. (All figures are in U.S. {dollars}.) Not solely is {that a} practically five-percent enhance over Q2 of 2022 or 6.4-percent fixed foreign money (we’ll clarify what that’s later), it’s additionally a really small enhance over the primary quarter of this yr.
Acushnet’s year-to-date gross sales are $1.375 billion. That’s an almost nine-percent enhance over 2022. And Acushnet’s income are up, as effectively. The Q2 internet revenue was practically $75 million (up 12.3 p.c over final yr) and revenue for the primary six months is $168 million. That’s up practically 14 p.c over final yr.
The large gross sales drivers had been Titleist golf golf equipment and golf balls, each of which confirmed double-digit progress in Q2. Within the U.S,. ball gross sales elevated 23 p.c, fueled by the new-edition Professional V1. And membership gross sales jumped 26 p.c, with the brand new TSR metalwoods and Scotty Cameron Tremendous Choose putters main the way in which.
That progress, nonetheless, was offset within the U.S. by a five-percent drop in FootJoy gross sales, significantly in footwear. Nonetheless, Acushnet is bullish on the remainder of 2023.
“We’re excited to launch new T-Collection irons later this summer time and a large assortment of latest merchandise from FootJoy and KJUS for the autumn and winter seasons,” Acushnet CEO David Maher mentioned in a press release. “Underscoring our enthusiasm is robust participation and curiosity within the sport of golf, significantly within the U.S., the place rounds of play are up over 5 p.c yr so far.”
International Specifics
Regardless of a strong efficiency within the U.S., Acushnet is treading water in Japan, Korea and Europe. Total, internet gross sales exterior of the U.S. dropped 6.3 p.c or solely 2.5 p.c in fixed foreign money. U.S. firms with important gross sales abroad will use fixed foreign money figures when reporting these gross sales. When the U.S. greenback is robust abroad, firms take a success on the change charges. Fixed foreign money ties the present worth of the U.S. greenback to final yr’s worth to normalize the gross sales numbers.
U.S. gross sales topped $401 million in Q2, a 14-percent enhance over final yr. Gross sales in Europe, Japan and Korea, nonetheless, had been all down between 5 and 10 p.c in fixed foreign money. Every space reported decrease FootJoy footwear gross sales. Ball and membership gross sales, nonetheless, had been up in Korea, whereas ball gross sales had been up in Europe.
Globally, ball gross sales topped $237 million in Q2 (up practically 20 p.c in fixed foreign money) whereas membership gross sales reached $188 million. That’s a 16-percent fixed foreign money enhance. Titleist Golf Gear (hats, gloves, baggage) was up barely for the quarter however, as talked about, FootJoy was down practically 10 p.c in fixed foreign money.
For the primary six months of the yr, U.S. gross sales topped $771 million (up 19.3 p.c). Europe is down 2.2 p.c for the yr however Japan is up 4 p.c in fixed foreign money whereas Korea is principally flat. What Acushnet calls Remainder of World, nonetheless, is up practically 15 p.c.
International golf ball gross sales for the primary half of the yr reached practically $430 million, up 20 p.c in fixed foreign money. Golf golf equipment hit practically $369 million in gross sales (up 16 p.c in fixed foreign money) whereas Titleist Golf Gear hit practically $137 million, up 24 p.c in fixed foreign money. FootJoy was down barely however nonetheless reached $363.5 million in gross sales.
Q2 Monetary Stories: Topgolf Callaway
It’s now two quarters in a row that Topgolf Callaway’s financial report has been, effectively, un-sexy. Regardless of the actual fact the corporate goes to crash the $4-billion gross sales barrier this yr, the press launch headline says outcomes had been “in step with expectations.”
You’d anticipate finding one thing amiss within the numbers. However whereas some segments had been down in comparison with 2022, Topgolf Callaway continues to be turning a tidy revenue and continues to be on observe to open eight extra services by the tip of the yr.
Q2 gross sales hit $1.18 billion, up 5.7 p.c over final yr (6.5 p.c in fixed foreign money). And quarterly income reached $117 million, up 11 p.c from final yr. Whereas the numbers are greater (thanks, Topgolf), the proportion will increase in gross sales and revenue are in step with Acushnet’s. Moreover, Topgolf Callaway included a slide in its presentation to traders touting itself as a “distinctive and compelling funding alternative.”
Some monetary analysts had been predicting barely greater quarterly gross sales however those self same analysts predicted solely 34 cents in earnings per share. Topgolf Callaway posted earnings per share of 39 cents after adjusting for one-time prices. Regardless of that, Topgolf Callaway inventory costs have dropped greater than 11 p.c previously week.
Section Specifics
One of many causes Topgolf is so precious to Topgolf Callaway is that its gross sales aren’t as seasonal as, say, golf tools. Q2 Topgolf and associated gross sales topped $470 million, a 16.6-percent enhance over final yr. And regardless of being No.1 in driver, metalwood and iron gross sales (in response to Golf Datatech numbers), membership gross sales dropped greater than six p.c fixed foreign money in comparison with final yr, reaching $340 million. Regardless of the lower, it’s nonetheless 80 p.c greater than Titleist membership gross sales.
Golf ball gross sales jumped practically 33 p.c (fixed foreign money) in Q2 to just about $111 million. Once more, perspective is required as Acushnet’s ball gross sales had been greater than double that quantity, at $237 million. Attire gross sales had been up practically six p.c in Q2 whereas Gear, Equipment and Different had been down 6.6 p.c.
Globally, Topgolf Callaway is in the identical boat as Acushnet. Q2 U.S. gross sales had been sturdy at $886.7 million, up practically 11 p.c. Europe, nonetheless, was down over 15 p.c whereas Asia was principally flat for the quarter. Topgolf Callaway’s Remainder of World was up 20 p.c.
By section, Topgolf, as talked about, topped $470 million. Golf tools hit $451 million which is basically flat in comparison with final yr. The Energetic Way of life section was additionally flat, coming in at $258 million.
First Half Statistics
For the primary six months of 2023, Topgolf revenues hit $874 million, whereas Golf Gear reached practically $895 million. Nonetheless, whereas Topgolf gross sales are up practically 21 p.c in fixed foreign money in comparison with the primary six months of final yr, Golf Gear gross sales are flat. Particularly, though ball gross sales are up practically 14 p.c ($203.6 million), membership gross sales are down practically 4 p.c at $691 million.
And though the Energetic Way of life enterprise unit was down in Q2, it’s nonetheless up for the primary six months by practically 16 p.c in fixed foreign money.
Whole gross sales for the primary half of the yr are $2.347 billion, up greater than 10 p.c in fixed foreign money. US gross sales alone are practically $1.7 billion.
However whereas income for Q2 had been up greater than 11 p.c, income for the primary half of the yr are down practically 26 p.c in comparison with final yr, at $142.4 million. Wanting on the firm’s revenue assertion, among the detractors embody the next price of products bought, greater Topgolf-related venue bills and curiosity bills and prices related to suspending Jack Wolfskin operations in Russia.
Q2 Monetary Stories: What It All Means
After watching these stories for the previous few years, it’s fascinating to see Topgolf Callaway and Acushnet change roles. It was once that Topgolf Callaway was all flash whereas Acushnet was regular and measured. Acushnet continues to be regular and measured however up to now this yr Topgolf Callaway is out-steadying and out-measuring them, not less than in the case of press releases.
Topgolf Callaway does say it’s anticipating to hit its internet income projections of $4.42 billion to $4.47 billion. And it’s additionally anticipating to succeed in its internet EBITDA (Earnings Earlier than Curiosity, Taxes, Depreciation and Amortization) projection of $625 million to $640 million. Topgolf is predicted to contribute greater than half of that.
Moreover, the corporate is predicted to open eight extra Topgolf venues by the tip of the yr. Building prices vary from $20 million to $40 million for every venue, relying on measurement. Payback is predicted inside 2.5 years.
Each Acushnet and Topgolf Callaway are, clearly, publicly traded firms. And in addition clearly, every firm’s press releases and earnings shows are meant for traders, not golfers. Each firms predicted modest progress for 2023. And reaching these objectives must be a layup.
However little doubt each wish to maintain traders glad. Topgolf Callaway inventory dropping 11 p.c previously week and 27 p.c previously yr regardless of massive gross sales and revenue numbers is little doubt a priority. Acushnet inventory is down barely over the previous week. But it surely’s up greater than 6.5 p.c over the previous month and up over 16 p.c over the previous yr.
Regular and measured, it appears, is perhaps factor.
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