If somebody employed Charles Dickens to write down a narrative concerning the Acushnet and Topgolf Callaway 2024 monetary stories, he’d doubtless name it A Story of Two Cities.
That’s to not say that for one firm it was the very best of occasions and for the opposite it was the worst of occasions. Removed from it. It’s simply that every report tells the tales of those two firms higher than any golf author or monetary analyst ever may. They inform the story of two golf firms (quickly to be three): one seemingly stacked with drama, the opposite regular with progress.
As at all times, it’s essential to learn past the headlines, dig deep and discover out what’s occurring. Do this and also you’ll discover that one thing that sounds devastating like, oh, I don’t know, a $1.45-billion LOSS for the yr, isn’t actually a foul factor. You’ll additionally discover out, nonetheless, that two straight years of declining gross sales may be trigger for concern for one firm’s stalwart divisions.
Earlier than we soar in, now we have to state the apparent:
We’re not, nor can we declare to be, monetary specialists, funding counselors or Wall Road-level enterprise analysts. We’re merely golf trade geeks who prefer to learn.
With that out of the best way, listed below are 5 key takeaways from the 2024 Acushnet and Topgolf Callaway monetary stories.
#1: Topgolf Callaway posted how huge a loss?
Topgolf Callaway posted web revenues of $4.24 billion in 2024. I don’t care who you’re, that’s so much. It’s down barely, by a bit over one %, from 2023 numbers. A lot of that lower got here from an $88-million drop in Energetic Life-style gross sales.
That stated, how in hell did Topgolf Callaway lose – verify notes – $1.45 billion for the yr?
The brief reply is that it didn’t. The lengthy reply may be present in what the finance wizards name a Goodwill and Intangible Asset impairment.
As you effectively know, Topgolf and Callaway are splitting into two separate firms this yr. It’s a break up fairly than a sale or a dump-off as Topgolf Callaway shareholders are getting dollar-for-dollar shares in each the newly unbiased Callaway in addition to Topgolf. A part of that course of is squaring goodwill and intangible asset worth on the stability sheet.
Callaway paid a premium to merge with Topgolf in 2021. Now that they’re divorcing (amicably, after all), the guide worth of issues like model recognition and fairness, mental property, worker expertise, market place, buyer lists and different intangibles have to be lowered to precise honest market worth. It’s a boring accounting factor which is why the annual loss was buried effectively down within the monetary report itself.
When you take away the impairment, Topgolf Callaway posted a $256-million revenue from operations and a $42-million web revenue. EBITDA ended the yr at $588 million. Firms use EBITDA (Earnings Earlier than Curiosity, Taxes, Depreciation and Amortization) to mirror the effectiveness of its gross sales, advertising and enterprise operations earlier than the finance division does its wizardry.
Revenue from operations, web revenue and EBITDA are all down from 2023 however at the very least that ink is black as an alternative of purple.
#2. Acushnet simply retains rolling
Titleist’s guardian firm, then again, posted a tidy little progress for 2024. Acushnet completed the yr with $2.46 billion in gross sales, an almost four-percent enhance when taking international trade charges into consideration.
Acushnet can be posting a $214-million web revenue for the yr. That’s up eight % over 2023. EBITDA was additionally up 7.5 %, at $404 million.
“Titleist golf equipment posted healthy gains, driven by the successful introduction of the GT metals and SM10 wedges and continued ball success,” CEO David Maher advised buyers final week. “The golf industry is healthy with record rounds of play in the U.S. in 2024, and world rounds up almost 20% over the past five years.”
Titleist membership gross sales topped $721 million in 2024, a 10-percent enhance over 2024. The rise is spectacular contemplating that Callaway’s membership gross sales, which topped $1 billion, had been primarily flat in comparison with ’23. As you’d count on, Titleist stays King of the Golf Ball World, totaling over $786 million in ball gross sales, a four-percent enhance globally over 2023.
That’s greater than double Callaway’s 2024 ball gross sales of $321 million. For the document, Callaway says it’s now at its highest golf ball market share ever, 20.6 %. A decade in the past, Callaway’s ball share was below 10 %.
#3: Each firms have an obvious attire drawback
Topgolf Callaway breaks its enterprise into three items: Topgolf, Golf Gear and Energetic Life-style. All three companies have been billion-dollar behemoths on their very own however the Energetic Life-style division is sputtering only a tad. Its 2024 income did high $1 billion however that’s down eight % from 2023. Particularly, international attire gross sales dropped 5 % whereas Gear, Equipment and Different (baggage, hats, gloves, and so forth.) dropped 12 %.
That stated, Energetic Life-style did flip an $82-million revenue in 2024. Sadly, that’s down 30 % from 2023.
Acushnet, then again, is a FootJoy drawback. Gross sales went down for the second straight yr with decrease gross sales volumes throughout all classes, notably footwear. The lower was small, solely two % in comparison with ’23 gross sales. Nonetheless, 2023 gross sales had been down 3.5 % in comparison with 2022. Quantity decreases had been partially offset by increased common promoting costs.
Titleist Golf Gear, nonetheless, was up 5 % in 2024. Acushnet says that progress is generally resulting from will increase in journey product gross sales because the Membership Glove acquisition is now totally built-in into the corporate’s operations.
Are the downturns simply market glitches? The attire and shoe markets have developed over the previous 5 years. There are extra unbiased manufacturers, area of interest firms and startups promoting high-quality attire and footwear at the moment than in 2019. Identical to a pack of hyenas taking down a lion, every of these small firms is taking a bit chew out of somebody’s gross sales.
These little bites add up over time.
#4 Getting ready for the Callaway-Topgolf break up
We’ve recognized the break up was coming since final September, however it’s startling to see how the separation is impacting how Topgolf Callaway financials are being offered. Particularly, the 2024 report distinguishes between Topgolf outcomes and “Core Business” outcomes.
Core Enterprise is what Callaway shall be going ahead which incorporates the Golf Gear and Energetic Life-style enterprise items. Collectively, these items reported gross sales of simply over $2.43 billion in 2024. Topgolf alone accounted for greater than $1.8 billion in gross sales. That’s an almost three-percent enhance over 2023 income.
The issue, which finally performed a key function within the determination to separate the businesses, is that the rise got here completely as a result of 10 new Topgolf venues that opened in 2024. 12 months-over-year same-venue gross sales have been taking place for the final two years, offsetting new venue gross sales. In the end, that makes progress unsustainable until one thing modifications.
Topgolf does stay worthwhile, with $114 million in black ink in ’24. That’s up 5 % over 2023. The corporate does say identical venue gross sales, whereas nonetheless down year-over-year, did exceed expectations in This autumn, as did venue margins, free money circulate and Adjusted EBITDA.
The pending break up, after all, led to Topgolf Callaway’s non-cash Goodwill and Intangible Asset impairment. The break up is predicted to be finalized someday in early Q3.
#5: Each firms see 2025 as extra bear and fewer bull
Each firms count on to tread water in 2025. Topgolf Callaway, paradoxically, is a bit more cautious than Acushnet on this regard. Topgolf Callaway expects general income to be down barely in ’25, at a predicted $4 billion to $4.185 billion. That’s down from the $4.24 billion reported in 2024.
Retaining the break up in thoughts, the corporate predicts Core Enterprise income of $2.275 billion to $2.35 billion. That’s down from final yr’s $2.43 billion. There’s a wider projection for Topgolf income, anyplace from $1.725 billion to $1.835 billion, roughly a $100-million swing. The corporate nonetheless expects same-venue gross sales to be down nevertheless it’s projecting a mid-single-digit drop. That’s a substantial enchancment over final yr’s outcome.
Acushnet, then again, predicts gross sales to achieve $2.485 billion to $2.535 billion, anyplace from a 2.5- to 4.6-percent enhance over 2024. The corporate expects new Professional V1 golf balls, Scotty Cameron putters and GT-1 metals to drive that progress. Moreover, the corporate is increasing its golf tools and footwear becoming community and has shifted FootJoy manufacturing out of China and into Vietnam.
Each firms cite international foreign money considerations and potential tariffs as efficiency “headwinds.” Loosely translated, “headwind” is one other approach of claiming “business challenges that are out of our control.”
Acushnet and Topgolf Callaway 2024 monetary stories: Closing ideas
To return to our authentic Dickensian theme, the Acushnet and Topgolf Callaway 2024 financials actually are A Story of Two Cities. Neither metropolis is crumbling however whereas one continues on a gentle and predictable tempo, the opposite goes by what quantities to an amicable divorce.
It’s tempting to characterize Topgolf Callaway as Bleak Home (after pulling a David Copperfield and making $1.47 billion disappear) and Acushnet as Nice Expectations however neither is correct. Acushnet will proceed operating its enterprise in its personal measured method. It does, nonetheless, have to try what’s occurring with FootJoy. Two straight years of declining gross sales isn’t a terrific development.
Topgolf and Callaway, then again, ought to come out of their divorce as viable unbiased entities. The corporate has an enviable free-cash place. That’ll assist, as will every firm focusing by itself enterprise wants.
Nonetheless, as soon as the mud settles this fall, Callaway will discover itself wanting up at Acushnet in general gross sales. Callaway hasn’t been in that place this decade and if there’s one factor each sled canine is aware of, it’s this:
When you’re not the lead hound, each view is similar.
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