• Topgolf Callaway reviews $1.04 billion in Q3 gross sales, up 5 % from final yr
• Acushnet Q3 gross sales are up over six % to $593 million
• Much less-than-expected Topgolf outcomes have thrown Topgolf Callaway inventory right into a tailspin
• Each firms are on course for record-setting gross sales years

The mud is settling within the wake of the Topgolf Callaway and Acushnet Q3 monetary reviews. And it seems we stay in a world the place one firm’s tally of over $1 billion in quarterly gross sales and practically $30 million in quarterly revenue may cause its inventory worth to tailspin.

 And on this identical world, that firm’s chief rival can submit “solely” $593 million in gross sales however greater than $57 million in revenue and Wall Road barely cracks a smile.

Welcome, buddies, to the high-stakes world of publicly traded golf firms.

The information of the previous week raises a multi-billion-dollar query: What do you do when the money cow you “merged with” to equipment-proof your organization delivers less-than-expected outcomes for 2 straight quarters?

For Topgolf Callaway, the reply could lie in “venue efficiencies.” When you’re Acushnet, you retain your head down and be glad it isn’t you.

We’re going to dive into the Q3 monetary reviews for each firms however, first, we should ship our customary disclaimer:

We aren’t, nor will we declare to be, monetary consultants, funding counselors or Wall Road-type enterprise analysts. We’re merely golf business geeks who wish to learn.

Now let’s have a look at the books.

Topgolf Callaway Q3 Financials

As has been the corporate’s pattern of late, the very high of the Topgolf Callaway Q3 financials press launch is downright understated. As an alternative of main with huge gross sales and revenue numbers, the very first bullet level reads as follows:

“Topgolf continues to drive efficiencies and delivered sturdy venue-level margins.”

Attractive, proper?

The following bullet level is even higher:

“On-course participation stays sturdy – Callaway maintains the number-one market share in woods, drivers, fairway woods, hybrids and irons.”

That’s adopted by the information that TravisMathew and Jack Wolfpores and skin delivered stable progress for the quarter and that each the full firm and Topgolf stay on monitor to be cash-flow optimistic in 2023.

“Each Golf Gear and Energetic Way of life had sturdy quarters,” mentioned CEO Chip Brewer in an announcement. “Topgolf, regardless of identical venue gross sales that had been decrease than anticipated, was capable of broaden venue margins.”

Wait. What?

“With present identical venue gross sales traits and overseas alternate charges, we’re reducing our ahead steering and taking decisive motion to decrease each prices in addition to capital expenditures and to drive extra synergies throughout our enterprise.”

Take all the gorgeous phrases out and what buyers heard was “decrease than anticipated” and “reducing our ahead steering.”

What Does That Imply?

There are many numbers in any quarterly monetary report. For Q3, Topgolf Callaway reported $1.4 billion in gross sales which is up 5.3 % over Q3 of final yr. That progress was paced by the Topgolf and Energetic Way of life enterprise models.

Moreover, earnings from operations was up 8.2 % however web earnings was down 23 % to $29.7 million in comparison with Q3 final yr. Topgolf Callaway cites larger curiosity bills attributable to larger charges, extra mortgage debt and elevated venue financing curiosity which price the corporate an extra $17 million.

Inside hours after asserting the outcomes, Topgolf Callaway inventory costs started to drop. The worth plummeted 18 % Wednesday evening in after-hours buying and selling and fell even additional yesterday. In reality, Topgolf Callaway inventory is down 37 % yr so far. As of this writing, the value stands at $10.35 per share. It was $25.44 this previous January.

So why the massive drop? It goes again to “lower-than-expected same-venue gross sales,” and “reducing our ahead steering.”

Topgolf Callaway had been anticipating mid to excessive single-digit progress in same-venue Topgolf gross sales, a key indicator of how a single venue is doing yr over yr. In actuality, same-venue gross sales truly dropped three %.

For the quarter, Topgolf revenues had been truly up eight % at $430.5 million. That enhance, nevertheless, is due solely to the seven new Topgolf venues that opened this yr, 4 of them in Q3 alone.

If that obtained buyers skittish, the following bit of reports gave them the heebie-jeebies.

Downward Forecasting

Publicly traded firms historically present buyers with ahead steering, administration’s finest estimate as to how the corporate will finish the yr. On Wednesday, Topgolf Callaway instructed buyers it doesn’t anticipate to satisfy its earlier income or EBITDA (Earnings Earlier than Curiosity, Taxes, Depreciation and Amortization) projections.

As lately as the top of Q2, Topgolf Callaway anticipated to hit $4.420 billion to $4.470 billion for the yr. That projection has been lowered to $4.235 billion to $4.260 billion. That will not sound like a lot but it surely’s lacking the mark by some $200 million.

EBITDA is used to show an organization’s gross sales and operations efficiency earlier than all of the finance stuff comes into play. Topgolf Callaway adjusted its year-end EBITDA downward from $315 million to $325 million to $280 million to $290 million.

In its presentation to buyers, Topgolf Callaway put its finest foot ahead. The corporate confirmed it’s nonetheless Numero Uno in golf membership market share at roughly 25 % and a stable second in golf ball market share at roughly 20 %. Moreover, it instructed buyers it’s spending $50 million on golf gear R&D and is ranked No. 1 in innovation and superior expertise in Golf Datatech’s latest Golf Product Perspective Research.

Simply In Case You’re …

All that, after all, is the massive story. The quarterly and year-to-date numbers, after all, are fascinating as properly.

As talked about, Q3 gross sales topped $1.04 billion whereas YTD gross sales stand at $3.39 billion, up eight % over final yr. YTD revenue is $172 million, down 25 % from final yr.

For the quarter, Topgolf gross sales had been practically $448 million and YTD stands at $1.33 billion, up 16 % from final yr.

Golf Gear gross sales for Q3 had been $293 million, down barely from final yr. Golf Gear gross sales stand at $1.19 billion for the yr which is mainly flat from 2022. Of that, membership gross sales reached $222.2 million for the quarter and $913 million for the yr. Ball gross sales reached $71 million for the quarter (down 5.4 %) and $275 million yr so far which is up seven %.

The Energetic Way of life class – attire, gear and equipment – was up six % for the quarter at $299 million. It stands at $877.6 million for the yr, a 12.4-percent bounce over 2022.

Moreover, Topgolf Callaway lately introduced plans to purchase BigShots Golf for $29 million. BigShots is a mini-Topgolf operation owned by Invited, nee ClubCorp. The deal lands Topgolf Callaway the lone owned-and-operated BigShots venue adjoining to the Invited-owned Firestone Nation Membership in Akron, Ohio. It additionally turned the license holder for 3 different franchised BigShots venues within the U.S.

Moreover, and maybe extra importantly, Topgolf Callaway can even change into a most well-liked golf gear and attire vendor for all 140 Invited-owned golf and nation golf equipment within the U.S.

Now, About Acushnet …

Oh, yeah, these guys.

If nothing else, Acushnet’s strategy to its quarterly financials hasn’t modified. Like the corporate itself, the financials are simple with nothing however the info. Certain, it additionally places its finest foot ahead for buyers however the firm simply retains chugging ahead.

Particularly, Acushnet’s Q3 gross sales topped $593 million, a 6.3-percent enhance over 2022. 12 months-to-date gross sales stand at $1.969 billion, an eight-percent enhance over 2022.

Acushnet chugs together with income as properly: $57.3 million in Q3 (up 10.6 %) and $225 million yr so far (up 13 %). Extra importantly, Acushnet says it’s going to hit its projections.

“Contemplating our third-quarter outcomes and expectations for the fourth quarter,” says Acushnet CEO David Maher, “we’re reaffirming our full-year income outlook and narrowing our Adjusted EBITDA outlook towards the excessive finish. This displays continued sturdy demand for Acushnet’s merchandise, underlying enthusiasm for the sport of golf and wholesome fundamentals throughout the golf business.”

Form of a unique vibe, don’t you suppose?

Acushnet Q3 Monetary Report – Specifics

Titleist golf membership gross sales paced Acushnet’s Q3 progress. Fueled by the brand new T-Sequence irons, membership gross sales topped $181 million in Q3, up practically 18 %. Golf ball gross sales in Q3 had been extra modest, coming in at $192.6 million, a 6.3-percent enhance. Acushnet asserts, nevertheless, that the rise is primarily attributable to larger promoting costs of the brand new Professional V1 line in comparison with the lower-priced 2021 fashions that had been offered final yr.

Titleist gear (hats, luggage, gloves, and so on.) was down 20 % for the quarter. Final yr’s Q3 gross sales had been skewed attributable to success of provide chain-related backorders. FootJoy gross sales had been up barely at $137 million.

12 months-to-date ball gross sales present simply how dominant Titleist stays. Gross sales for the primary 9 months topped $622 million (up 14 %) whereas Callaway is a distance second with YTD ball gross sales of $275 million (a seven-percent enhance). Titleist membership gross sales stand at practically $550 million for the yr (up 15 %) in comparison with Callaway’s dominance at $913 million which is definitely down 5 %.

FootJoy’s enterprise is mainly flat at $500 million in comparison with final yr when overseas forex alternate charges are taken into consideration whereas Titleist gear gross sales are up seven % YTD at practically $185 million.

The U.S. stays Acushnet’s largest market by far with YTD gross sales topping $1.12 billion.

For the yr, Acushnet is projecting whole gross sales of $2.3 billion to $2.4 billion. Its EBITDA projections are $365 million to $375 million. It’s notable to check Acushnet’s $365-$375 million EBITDA on $2.3-$2.4 billion in gross sales in comparison with Callaway’s projected $280-$290 million in EBITDA on greater than $4.2 billion in gross sales.

Topgolf Callaway and Acushnet Q3 Monetary Reviews: Closing Ideas

What does all this imply to these of us who play golf for enjoyable? Not a ton, actually. Regardless of plummeting inventory costs, Topgolf Callaway isn’t going anyplace. And, no, none of this has something to do with what the corporate pays Jon Rahm to play its golf equipment or put on its hats. And, no, none of this implies we’re going to see $900 drivers anytime quickly, both.

We heard rumors of Topgolf-related layoffs at Callaway earlier this yr which might be what the corporate meant when it cited “venue efficiencies” as a part of its plans going ahead. As talked about, seven new Topgolf venues have opened this yr with 4 coming in simply the previous two months. 4 extra venues are slated to open by the top of the yr.

The corporate did cite a drop-off in company occasions as a key motive for lacking same-venue progress expectations. Apparently, Topgolf was a favourite venue for post-COVID company occasions final yr however that enterprise has slowed. It will likely be attention-grabbing to see how Topgolf sparks same-venue progress going ahead.

As for Acushnet, the takeaways are not any totally different from final quarter (and the quarter earlier than that and the quarter earlier than that). Acushnet is a golf firm, an on-course golf firm that’s well-managed and performs to its strengths.

In reality, for those who take away all the things however golf golf equipment and golf balls, Acushnet and Topgolf Callaway gross sales are nearly equivalent.